HomeMy WebLinkAboutPCockrum Ltr-Ad Valorem Tax 9-22-10 1825 Broken Bend Drive • Westlake, Texas 76262
phone: fax: 206-600-6858
September 21, 2010
Westlake Town Council
RE: Ad Valorem Tax and Capital Improvement Bond
Dear Town Council:
Unfortunately, due to prior commitments I won’t be able to attend the upcoming workshop on 9/23. As such,
please consider the following input as the town council works through the budget discussion.
We need to convent and defend our lack of property tax as a point of significant pride and strategic
cornerstone to our financial governance. If a tax is implemented it will increase the size of our government and
it will never decrease. From all that I’ve heard, I don’t believe we’ve taken enough action to curtail our cost in
advance of making such an historic and realistically irreversible step as to create an ad valorem tax. Please
consider the following alternate path to solvency.
1. Property Tax
a. Maintain the 0% property tax rate and utilize the coming months to more thoroughly
investigate and act on cost reduction options. Discussion without action will do little to solve
our current condition. Cost reduction options include, but are not limited to:
i. Outsourcing the EMS saves ~$500,000/yr
1. Adds $3,000,000 to general fund over 6 years, $6,000,000 in 10 years
2. Avoids $1.9M in projected cap-x (trucks, ambulance, gear, etc) – see pg 8 of
8/25 presentation. Plus it avoids future building costs
3. $500,000/yr savings ($1M cost - $400k (keller) - $100k ems revenue)
southlake bid would trim the savings to $425,000/yr.
4. $0 administrative cost add … trade-off current EMS HR, admin, etc costs for
outsource contract monitoring cost.
5. Yes it could increase response times, but recall that the chief couldn’t say for
certain how many were critical care, he did note that cardiac is very rare and
he couldn’t confirm that the additional response time would’ve made a
difference.
a. Increased call times
i. 4.7 min (keller ems)
ii. 2.8 min (southlake ems) … this will drop significantly with the
completion of FM1938, and even further if/when southlake
builds their proposed Dove Rd station.
6. @ $500k/yr added cost, Westlake EMS has depleted $4,000,000 from our
general fund since its inception in ‘02
ii. Trim overhead cost by 10% saves ~$200,000/yr
1. Don’t hire the proposed additional staff member
2. Curtail all non-essential expenses, retreats, surveys, etc.
1825 Broken Bend Drive • Westlake, Texas 76262
phone: fax: 206-600-6858
3. Enact a one year wage freeze and/or reduction as needed to meet the
balance of the 10% target reduction
iii. Acting on i and ii above generates $700,000/yr in savings, adds $4,200,000 to the
general fund over the coming 6 yrs, maintains solvency, and provides an FY15/16
general fund balance = $2,600,000. All without accounting for additional 1-time
revenues. Regardless, we could maintain our desired 90 cash balance of $938k (pg
45 of the 9/16 presentation) and spend ~ $1.5m for cap-x improvements.
b. Deloitte will generate some level of sales/use tax as they outfit their building. We should
pressure them harder as good corporate citizens to shift that tax to Westlake. Is that worth
$200,000 or $400,000??
c. As an alternate to acting immediately on cost reduction, we could hold the 0% tax rate and
form a citizen/town panel or hire an independent consultant (Accenture, Alvarez & Marsal, etc)
to evaluate options and recommend our best path with a target to complete their work in six
months. Doing so could bring additional objectivity and perspective to our financial situation.
2. $6.3 Million Bond
a. Postpone the vote on the bond, or
b. At minimum, allow the citizens of Westlake to vote on the bond. After all, the significant
majority of the fund allocation is for what I refer to as lifestyle choices as opposed to mandated
needs.
Sincerely,
Patrick A. Cockrum