Saginaw staff proposes de minimis tax rate as budget prioritizes employee pay raises and one-time projects

Miss Kim, the city's budget presenter, told the Saginaw City Council that the proposed FY 2024–25 tax rate will be the de minimis rate and that the proposed budget both funds a large pay-plan increase and draws down fund balance to cover one-time requests.

The budget presentation, given during a council workshop, laid out revenue and expense assumptions and next steps for public notice. Miss Kim said, “The proposed tax rate is equal to the de minimis tax rate,” and that the de minimis rate is about half a cent lower than the current rate. She framed the budget as "structurally balanced," noting ongoing expenses are covered by ongoing revenues while about $1.8 million of fund balance would be used for one-time items.

Why it matters: adopting a proposed rate for public notice starts the legal process that leads to a public hearing and a final adoption vote. Because taxable values rose, Miss Kim said the proposed rate would still increase the typical homeowner's bill: she estimated the average home value rose from $248,000 to $258,000 and that the average homeowner would see an estimated annual tax increase of about $36.35 under the proposed rate.

Key details: Miss Kim summarized revenue assumptions (sales tax projected +3% over the current year adopted; year-to-date collections adjusted to +5%) and called out several revenue and cost drivers. She said interest earnings are projected to rise about $840,000 over the current year budget and that certified taxable values recently exceeded $3.1 billion, driven in part by about $30 million in new value (roughly $24 million residential and $6 million commercial/industrial).

On the expense side, the council prioritized Option 2 of the pay plan. Miss Kim described Option 2 as bringing employees to the appropriate pay grade plus the step for their years of service; she said the proposed budget accommodates that plan based on the de minimis tax rate. "Y'all said the priority was option 2 of the pay plan," she said, adding that part-time positions would receive a 3% increase (from about $15 to roughly $15.45) and that overall overtime budgets rise (staff estimated an overtime increase of about $66,000 across departments, largest in police and fire).

One-time and ongoing items: the proposal includes one-time capital and program requests such as an ERP system upgrade, a building-maintenance van (~$80,000), radio replacements, fire station exhaust work, aquatic-center repairs, proactive HVAC replacement (~$110,000), and senior-center startup costs (~$7,250). Miss Kim said some items were not funded because the pay-plan priority consumed available capacity.

Service contracts and operations identified in the presentation included a dispatch contract with Lake Worth ($601,510 per the approved contract), expected multi-year electric-rate increases (staff cited a projected 5.4% cooperative electric-rate increase), and three months of additional utility costs for a new facility (Miss Kim estimated an ambulance-service line item of about $51,260 for three months). She also noted increased appraisal fees from Tarrant County (~$18,000) and credit-card processing fees (largely reimbursed by enterprise funds).

Reserves and debt: Miss Kim said the city's financial-management policy targets a 25% operating reserve; she estimated the restricted fund-balance target at $6.5 million and that the city would remain above required reserves after the proposed drawdown, though she cautioned current-year estimates could change. For the debt-service fund, she said the INS (interest & sinking) rate is projected to fall by about 1.6¢ because values rose and no debt was issued this year.

Next steps and procedural notes: Miss Kim asked the council to vote to set the proposed (de minimis) tax rate so staff can publish required notices. She said the city will post the notice to the Tarrant County tax website, publish it in the paper and hold a public hearing at a special council meeting on the 13th when the council may adopt the budget and tax rate. The transcript records a council member saying, "I move that we accept the vote, please," and later a motion to adjourn that was seconded, but the transcript does not show a formal roll-call vote on the proposed tax-rate notice in this session.

What remains unclear: several figures and future-year impacts remain estimates in the presentation. Miss Kim noted property/liability insurance rates were not yet finalized and said current-year estimates still need refinement; she warned that numbers could change when those updates arrive.

The council scheduled a public hearing and special meeting to consider adoption; staff will publish the required notices before that hearing.