August 28, 2004

Response to suggested budget cuts from Ron West
a Column by Councilman John H. Lewis

Council John H. Lewis, Place 1

I was disappointed that Ron West failed to take advantage of his allotted time during the Public Hearing on the 2004-2005 City Budget. He had sent to each council member a list of cuts to consider. He has also spread this list widely by e-mail as well as in an article here in the Local News Only.

Had he taken the time to list his items during the public hearing, the city could have responded to each item, either by agreeing, disagreeing or correcting possible misinterpretations he may have had in his review of the budget work papers which were discussed at the budget retreat last month. 

The city did respond in general terms as much of West proposals were related to the funding of reserves. As I do not have cable to view the meeting on TV and have not yet received a tape of the meeting I will state what I recall the general statement to be. “The city does have a number of reserves for various purposes. Some reserves are to build funds to operate the city during times of economic downturns and emergency spending. Other reserves such as those built in the Park & Recreation Facilities Development Fund & Crime Control District are funded by a 1/2¢ sales tax assessment approved by the voters of NRH. 

The Crime Control District was originally approved by voters for a 5 year term. Last year the voters approved to renew the 1/2¢ sales tax to fund the Crime Control District for an additional ten years. Sales taxes collected for these funds can be used only to the purpose approved by the voters. These funds can not be used in the general operating budget of the city.”

Government accounting is quite different from private accounting. It took me some time during my first year as a councilman to get comfortable with the difference even though I am a degreed accountant.

Following are a few comments on the West proposal.

$1,000,000 for North Hills Mall street and signal improvements

The $1,000,000 Ron refers to is money which will be drawn from reserves and does not impact the operating budget. It is reserved for some future date when the North Hills mall is actually renovated

This project will consist of improvements to selected streets and signals adjacent to the North Hills Mall property. The city expects the North Hills Mall property owner will complete these improvements as part of its large-scale renovation. The City will most likely enter into an incentive agreement with the owner, which may include language specific to this project. If so, it is anticipated that the agreement will call for the City to reimburse the owner up to $1 million of actual costs for street and signal improvements.



The mall renovation and expansion will positively impact the City’s economic development efforts. The traffic impact studies that will be required for this project are expected to show that significant upgrades will be required to the existing streets and signals around the Mall in order to handle the future traffic. This project will provide the necessary upgrades.

The two preceding paragraphs came directly from the project sheet which I will assume West has had a chance to study as he reviewed the proposed city budget. The city is poised to assist the owner of North Hills Mall in a variety of ways to get the mall productive again, so as to increase sales tax revenue to such a level our reliance on property taxes can be reduced. Curiously, the city is being criticized for failing to fill North Hills Mall, which is owned by others, with retailers and criticized again for developing tools to assist the owners in their efforts through economic assistance.

$579,910 Specific Improvements in TIF #2

The second largest savings which he proposes, $579,910 is anticipated revenue in from “Home Town” (TIF #2). This is revenue transferred to the Debt Service Fund for TIF #2, to be used to retire current and future debt of planned municipal projects within the TIF area. By law we can not use this money for any purpose other than that which was stated in the TIF. The funds can not be transferred into the general fund and used for operational expenses. The city has restrained from budgeting or contracting any of the TIF Projects to date. They will only obligate to begin a project once sufficient homes are built to provide enough revenue to manage the debt retirement of such projects. 

It is very apparent that West disagrees with the creation of this TIF. But the fact remains that the TIF was created in 1999. Studies on the TIF were authorized in November 1997. Many public meetings were held on the subject in 1998. There was a tremendous amount of publicity and news articles between 1997 and 1999. 

$565,400 Eliminate any work on South Library Branch

The next big one is that he includes in his total a line item for $565,400 which he list as “Eliminate any work on South Library Branch” The budget does not include this $565,400. In the back of the Budget Workbooks is a section called “Unfinanced Projects”. Items listed in this section are not in the budget, but are presented at the budget workshop to make council aware of future needs to be considered.


$325,000 Reduce Reserve Funding for Aquatic Reserve

NRH2O is financed by the generation of profits within the park. The anticipated profit for the coming budget year is $325,000. Profits go into the fund as they are generated. They will be used to purchase new attractions and repair or replace older attractions as they wear out or no longer attract visitors to the water park. This water park like the city golf course is not a tax burden to our citizens. Both generate enough revenue to pay expenses as well as retire the debt incurred to build them. Should the water park or golf course fail to generate a profit in any particular year, funds to operate them will come from the reserves each has built up during profitable years so again they will not be a tax burden on our citizens while at the same time providing them many hours of pleasure in the convenience of their own city.


$311,000 Reduce Crime control District Bring expenditures into line with income.

West clearly states in his correspondence to city employees and citizens that his recommendations save nearly $3.7 Million without any service cuts, but at the same time he makes this claim he list as part of the savings that we should “Reduce Crime Control District Expenditures by $311,000 bringing expenditures into line with income.” There are two problems with this item, first the Crime Control District = Police Department = Services. Secondly, the $311,000 is coming out of reserves as our sales tax revenues, voter approved ½ cent sales tax, were below expectations.

$250,000 Eliminate Economic Development grab bag appropriation

West actually lists this item twice. He recognizes in his comments that this may be a duplicate but adds the amount into his total anyway. This $250,000 also comes from a voter approved ½ cent sales tax to fund parks, not from property tax revenues. The purpose of this line item in the budget is to help grow our economic base. It is like seed money, to help redevelop the South Grapevine Highway to keep, attract and grow businesses in the area. By investing these dollars we hope to grow our sales tax base, which again if successful will reduce our reliance on property taxes. The money will only be spent on request of variance projects along the highway.

$150,000 CIP Reserve Increase to $2.9 Million Unnecessary

$2.9 Million had been placed in this reserve between 1999 and 2004. $1.9 Million had been spent over the years leaving the balance of the CIP Reserve at $890,000. 

While West generally seems to oppose reserves for contingencies, he should be pleased to know that the funding of this reserve was reduced $400,000 from the current year’s budget of $550,000 and $450,000 in the prior year. Our ability to fund this reserve is dependent on tax revenue beyond total expenditures to operate the city. Funds reserved in this account may be used to repair or replace unforeseen capital needs. An example might be if the vehicle which struck Ryan’s Steak House last month struck a city water tank instead. Would the citizens be satisfied to wait for an election to approve the repair of the tank at some future date or would they expect the city to find the funds to get the repairs made ASAP to restore service to their homes.

It is my hope that after you have read this, that you might take the time to search out factual information by checking other sources before accepting as fact what one person may present. West has sought out and found various items which he believes are valid savings based on his philosophy of government spending. Other suggestions may come from misinterpreting the data, either way the task of saving millions from the city’s proposed budget is simply not as easy as he projects. Some cities have resisted the accumulations of reserves; those cities have suffered loss of sales tax revenues as has North Richland Hills.
The city of Bedford is now seeking a 30% increase in their property tax rate. Their roads are in poor repair, their employees are underpaid and leaving in droves.

You have heard it many times if you are tuned into the council proceedings; our city is well run and well managed by City Manager Larry Cunningham and his entire staff. This is why I chose to move to North Richland Hills in 1998. 

Those of you which banded together to fight the RV issue have every right to do so. But don’t be blinded by your dislike of this one issue or by misinformation provided by others to cause deeper dissention.

God Bless you all,

John H. Lewis 
Councilman, Place 1, NRH 

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