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Dripping Springs council reviews proposed FY2025 budget, flags $2 million impact-fee shortfall
Summary
City staff presented a draft FY2025 budget with reorganized utility fund line items, a proposed vac truck purchase, and a projected $2,000,000 negative impact-fee balance; council directed staff to pursue a rate study and return with lease/purchase options for equipment.
City staff presented the draft fiscal year 2025 municipal budget on July 2, focusing on utility funds, wastewater operations and capital projects and urging caution about over‑anticipating developer-paid impact fees. "The draft shows a negative fund balance of around $2,000,000 at the end of FY25," said Sean, city staff, summarizing the impact‑fee outlook.
The presentation reorganized the utility fund to separate development capital, wastewater, water and operations, and highlighted revenue expectations: wastewater fees projected near $1.6 million and water revenues growing toward $200,000. Staff said the Texas Water Development Board project remains a stand‑alone, money‑in/money‑out line item and noted some capital projects shown are TERS (regional) projects.
On expenditures, staff proposed phasing the purchase of a vac (vacuum) truck over three years (budgeting roughly $200,000 per year toward a ~$320,000 cost) and recommended a $50,000 line for potable water provision at the wastewater plant, $50,000 for televising lines and $70,000 for backup lift‑station pumps. Utilities staff said owning a vac truck would allow in‑house jetting, hydro‑excavation and televising work that now is contracted out and could reduce recurring annual costs.
A council member questioned the three‑year buy plan and urged staff to evaluate lease or lease‑to‑purchase alternatives, noting potential SB2/debt‑service implications for long‑term obligations. "I'd almost rather see us do a five‑ or six‑year lease with an option to buy at the end," the member said.
Because the draft shows impact fees arriving later than previously assumed (shifting from payment at final plat to payment at building permit), staff recommended a rate study in FY25 so utility rates could be adjusted to cover a greater share of debt service on the wastewater plant. Staff said current debt service for FY25 is covered by front‑loaded payments from previously issued debt series and that historical assumptions had impact fees covering about half of plant costs.
Council asked staff to return with more explicit comparisons (lease vs. purchase, ROI data and clearly marked redlines between draft versions) and to make transportation and parks a priority in upcoming workshops. Staff said it will pursue lease‑option analysis, schedule a July 16 workshop on transportation/parks/HOT funds, and hold an additional August 6 workshop as needed.
The council did not take a final vote on the budget; staff will revise the draft and bring changes back for future consideration.
