1 1 2 3 KERR COUNTY COMMISSIONERS' COURT 4 Special Session 5 Wednesday, August 14, 2019 6 10:00 a.m. 7 Commissioners' Courtroom 8 Kerr County Courthouse 9 Kerrville, Texas 78028 10 11 12 13 14 15 16 17 18 19 20 21 22 23 PRESENT: ROB KELLY, Kerr County Judge HARLEY BELEW, Commissioner Precinct 1 24 TOM MOSER, Commissioner Precinct 2 DON HARRIS, Commissioner Precinct 4 25 2 1 I-N-D-E-X 2 NO. PAGE 3 1.1 Consider, discuss and take appropriate 3 action to take a record vote on the 4 proposed 2019 Kerr County tax rate. this will be the combined tax rate 5 for Kerr County and Lateral Roads. 6 1.2 Consider discuss and take appropriate 40 action to set the date and time of the 7 two public hearings required for the 2019 tax rate for Kerr County and Lateral Roads. 8 1.3 Consider, discuss and take appropriate 43 9 action to set the date and time for the adoption of the 2019 Kerr County and 10 Lateral Roads tax rate. 11 1.4 Consider, discuss and take appropriate 45 action regarding base salary schedule 12 for Elected Officials. 13 1.5 Consider, discuss and take appropriate 46 action to review, finalize and authorize 14 filing the proposed budget for fiscal year 2019-2020. 15 1.6 Consider, discuss and take appropriate 64 16 action to authorize (pursuant to Section 152.013(b) of the Local Government Code) 17 publishing the notice of proposed salary increases, expenses, and allowances for 18 elected county and precinct officials of Kerr County, Texas for the Fiscal Year 19 beginning October 1, 2019. 20 *** Adjournment. 66 21 *** Reporter's Certificate. 67 22 * * * * * * 23 24 25 3 1 JUDGE KELLY: Okay, it is ten o'clock on 2 Wednesday, August the 14th, 2019 and the Commissioners' 3 Court of Kerr County is now in session. As I understand 4 it, we can't take a record vote without four of us being 5 present. Is that correct, James? 6 MR. ROBLES: I am not an attorney, but I 7 believe so. 8 JUDGE KELLY: Well, I'm looking for my 9 attorney, and she's not here so -- 10 COMMISSIONER HARRIS: That's what she told 11 us the other day. 12 COMMISSIONER MOSER: That's what we've been 13 told. So we should put out an all call for -- 14 COMMISSIONER HARRIS: We know Commissioner 15 Letz can't be here. 16 COMMISSIONER MOSER: Yeah, you're right. He 17 predeclared. 18 MRS. GRINSTEAD: He just got here, 19 Commissioner Belew. 20 COMMISSIONER MOSER: Now, what were you just 21 saying? Could you repeat what you just said? 22 (Commissioner Belew present.) 23 COMMISSIONER MOSER: Judge, I think we now 24 can have a record vote. 25 JUDGE KELLY: We've been waiting because we 4 1 can't have a record vote without you. 2 COMMISSIONER BELEW: Okay. 3 COMMISSIONER MOSER: So how do you vote? 4 (Laughter.) 5 COMMISSIONER BELEW: I could vote like I did 6 on the annexation in Ingram. 7 JUDGE KELLY: Okay. First this is, let me 8 remind everybody about your cell phones. We don't want 9 cell phones going off here in the courtroom. And the 10 policy is for the Sheriff to take them up, if they do. 11 And as I tell people, we've never enforced that but 12 today might be the first day if it goes off. Give y'all 13 notice. 14 On our approval agenda, the first item is 15 1.1 consider, discuss and take appropriate action to 16 take a record vote on the proposed 2019 Kerr County tax 17 rate. This will be the combined tax rate for Kerr 18 County and Lateral Roads. Mr. Reeves. 19 MR. REEVES: Good morning. I believe 20 Mrs. Grinstead passed out several sheets for your box 21 yesterday. If you would turn to the one with the 22 various colored -- 23 JUDGE KELLY: It's in the box. It's not on 24 the table. 25 MR. REEVES: You will recall last year's tax 5 1 rate combined, including interest and sinking fund, 2 maintenance and operations for the general fund, and 3 lateral road fund was .515 per hundred dollars 4 valuation. This year's effective tax rate combined is 5 .4909 per hundred dollars valuation. That is the rate 6 that it would take to have the same level of maintenance 7 and operations and raise the same revenues. Any rate 8 above that will require two public hearings, which that 9 will be the next item on the agenda. The combined tax 10 rates for this year cannot exceed .5242 per one hundred 11 dollars valuation, and in conversations with the 12 auditor's office, it is my understanding that the 13 proposed tax rate for this year would be .515 per 14 hundred dollars valuation, which represents a 4.909 15 percent increase over the 2018-2019 tax rate. 16 COMMISSIONER MOSER: Wait. Oh, so -- 17 MR. REEVES: The effective -- 18 COMMISSIONER MOSER: -- 4.09 percent 19 increase over the previous year? 20 MR. REEVES: The effective rate, this 21 rate -- 22 COMMISSIONER MOSER: Over the effective 23 rate? 24 MR. REEVES: Yes, sir. 25 COMMISSIONER MOSER: Okay. Okay. Good. 6 1 COMMISSIONER BELEW: Say the number again, 2 please? 3 MR. REEVES: .4909 percent -- or not .49, 4 let me rephrase that Commissioner, 4.909 percent. 5 COMMISSIONER MOSER: 4. 6 MR. REEVES: Almost five percent increase in 7 simple math. 8 COMMISSIONER BELEW: Okay. Yeah. This font 9 is too small for me to read. So I may ask you some 10 other numbers. 11 MR. REEVES: That's quite okay. Also in 12 that is just the summary of the calculations, not the 13 entire worksheet but the summary of the calculations. 14 COMMISSIONER MOSER: Okay. 15 MR. REEVES: This also takes into effect the 16 one-half cent sales tax, which reduces the property 17 taxes for our right. 18 COMMISSIONER MOSER: Okay. Thank you, Bob. 19 That's very helpful to present it that way. 20 MR. REEVES: One cent of the tax rate equals 21 approximately $365,800 in tax revenue. 22 COMMISSIONER MOSER: Okay. Good deal. 23 JUDGE KELLY: Since we're going to be 24 talking about effective tax rate, can you give us your 25 thumbnail summary of the definition of effective tax 7 1 rate so we can understand where we got -- how we got 2 here? 3 MR. REEVES: Thumbnail sketch, and you all 4 will recall I presented this in one of the Thursday 5 morning workshops. But the effective tax rate is the 6 rate to raise the same amount of revenue in one tax year 7 versus the prior year. Property values go up. Your tax 8 rate to raise the same revenue should come down in a 9 corresponding manner. Now, I must caveat that with 10 please remember the formulas developed to come up with 11 an effective tax rate is not the math that we learned. 12 Our friends in Austin developed the formula. They 13 develop it on a two-year basis. So it's not the math 14 that we all learned how to use. And I want to caveat 15 that. 16 Also, the effective tax rate does not take 17 into account new taxable value. You mentioned this the 18 other day, Commissioner. About new improvements, new 19 value, what -- what -- what you have from that. It also 20 takes into account loss in value. Loss in value can be 21 attributed to property becoming exempt that was not 22 previously exempt. Case in point. Probably next year 23 they'll be a little bit, because we're acquiring some 24 right-of-way from some private property. So that comes 25 off the tax roll. 8 1 It also takes into account properties that 2 have, for the first time receiving the 1-d-1, which we 3 commonly refer to as Ag value. So that's a loss in 4 value from prior years. Other exemptions could be 5 partial exemptions, charitable -- say a new church is 6 built or the church buys an existing building and 7 remodels it. Churches are exempt from property 8 taxation. So these are examples of calculations that 9 you must go through to come up with the effective tax 10 rate. 11 COMMISSIONER MOSER: So they take into 12 account the reductions, but they don't take into account 13 the increase? 14 MR. REEVES: The increase -- the new 15 improvements are new money that's coming in. The basis 16 behind new improvements, Commissioner, is that you build 17 something new, it's going to require more of our 18 services to protect with the Sheriff, who -- who you may 19 have. So, therefore, you -- you are granted that to -- 20 in your calculations. 21 COMMISSIONER MOSER: That sounds reasonable. 22 The -- even though it's done by Austin, it sounds 23 reasonable. 24 MR. REEVES: That does sound reasonable. 25 And it's a plausible reason why you look at it. In a 9 1 booming economy, your -- your same house, if it goes up 2 in value the effective tax rate comes down, we have a 3 down turn in the economy. The house values go down or 4 the commercial buildings go down, the effective tax rate 5 could increase. 6 COMMISSIONER MOSER: So we had a, like, 1.3 7 million dollar increase in revenue because of the -- the 8 cost of increased value of property. And that was new 9 property. And you're -- just off the top of your head, 10 and I see you've really be scratching it -- 11 MR. REEVES: Yes, sir. Yes, sir. 12 COMMISSIONER MOSER: -- but -- 13 MR. REEVES: With 12 entities, I've 14 scratched a lot. 15 COMMISSIONER MOSER: I've been scratching -- 16 you've scratched a lot about that. The other guys 17 oughta catch suit here. But -- so about 40 percent of 18 that you thought was from new construction or increased 19 value property sales or whatever. 20 MR. REEVES: That's an off-the-cuff 21 estimate. I haven't had -- 22 COMMISSIONER MOSER: Yeah. Yes, sir. 23 MR. REEVES: It was roughly -- 24 COMMISSIONER MOSER: 40 percent. 25 MR. REEVES: It was roughly, I want to say, 10 1 80 million, Commissioner. 86 million. 2 COMMISSIONER MOSER: Yeah. Okay. 3 JUDGE KELLY: Increased value? 4 MR. REEVES: New -- new taxable. 5 COMMISSIONER MOSER: New taxable. And that 6 can be new construction or increased property values? 7 MR. REEVES: No, sir. That's just the new 8 construction. 9 COMMISSIONER MOSER: Just new construction. 10 MR. REEVES: New construction. You add a 11 garage. 12 COMMISSIONER MOSER: Okay. 13 MR. REEVES: You build a new building. You 14 build a new building, and it's a commercial building and 15 you put new furniture, fixtures and equipment in it. 16 That's new -- 17 COMMISSIONER MOSER: But some of that could 18 also be if a property were on the books, the Appraisal 19 District books, and it's sold for 50 percent more, no 20 improvements whatsoever, just sold for that much more, 21 okay, because of -- it had a nice lake that had water, 22 okay, then that would be included in that -- 23 MR. REEVES: Not in the 86 million. 24 COMMISSIONER MOSER: Not in the 86 but 25 included in -- 11 1 MR. REEVES: In the overall -- 2 COMMISSIONER MOSER: -- the 1.3 million? 3 MR. REEVES: And that -- that because of 4 increased values, a better economy, that's when the 5 effective tax rate calculations play into effect. 6 COMMISSIONER MOSER: Okay. Very good. 7 Thank you, Bob. Very helpful. 8 COMMISSIONER BELEW: A lot of categories. 9 MR. REEVES: There are a lot of categories. 10 The -- I think there's a total of about 28 pages to come 11 up with this number. 12 COMMISSIONER BELEW: I see you have a 13 reliable formula for calculating it. It sounds like 14 it's different for different kinds of properties, but 15 you -- but there's unexpected in there from year to 16 year. There's no way of knowing. 17 MR. REEVES: And there -- there is no way of 18 knowing on that. And while, you know, you look at 19 articles -- and no offense from my friends from the 20 press here, they talk about increased market value, what 21 we should be concerned with as far as a budgetary 22 process is increase in taxable value. Yeah. Because 23 every -- even the courthouse has a value. It could have 24 gone up. I don't know. I didn't look. But the 25 courthouse should have a value, City Hall should have a 12 1 value, but it's not taxable. 2 COMMISSIONER BELEW: Well, we talked 3 about -- I think I asked you this question. About a 4 non-profit on the river, and they had -- it's a nice 5 property, but part of it's not usable and it's a 6 non-profit. 7 MR. REEVES: And it -- the value went up. 8 COMMISSIONER BELEW: Value went up. 9 MR. REEVES: But the amount of tax revenue 10 generated stayed the same because it was zero. 11 COMMISSIONER BELEW: Yeah. 12 COMMISSIONER MOSER: This is not your bag, 13 but -- directly but indirectly, on property values, and 14 if -- mentioned this to KCAD in the past, but you know, 15 in improvements and properties, there's a lot of money 16 spent on improvements, which are not above the ground. 17 As a matter of fact, they're below the ground. Building 18 big lakes. And that increases property values a lot, 19 but for some reason I'm not sure that the appraisal 20 district considers that as an improvement. They do when 21 they do comps and things like that. 22 MR. REEVES: And they will -- they will 23 compare -- 24 COMMISSIONER HARRIS: Like properties. 25 MR. REEVES: -- like properties. 13 1 COMMISSIONER MOSER: Right. 2 MR. REEVES: Does this one have a pond, a 3 lake, did this one not? So it -- it reflects back into 4 the mark. 5 COMMISSIONER MOSER: But if somebody spent 6 -- if somebody spent a hundred thousand dollars putting 7 in a lake, that's not the same as building a hundred 8 thousand dollar barn. A hundred thousand dollar barn 9 goes directly on, whereas putting a hundred thousand 10 dollar lake in -- 11 MR. REEVES: Did the hundred thousand dollar 12 lake actually contribute $100,000.00 to the market value 13 of the property? It's contributory value to the market 14 place. 15 COMMISSIONER MOSER: Contributory value. 16 Yeah. Okay. Gotcha. 17 MR. REEVES: And now I'm putting my 18 appraiser's hat on. 19 COMMISSIONER MOSER: Okay. Right. Okay. 20 COMMISSIONER BELEW: But that again goes 21 back to those variables. 22 MR. REEVES: They all go back -- 23 COMMISSIONER BELEW: The comparison is 24 unpredictable. 25 MR. REEVES: And here again, Commissioner, 14 1 you put a lake on a ranch that has 1-d-1 or what we 2 refer to as Ag value, the market could go up but the Ag 3 value did not. It did not. 4 COMMISSIONER HARRIS: Or wildlife. 5 MR. REEVES: Or wildlife. Well, that's 6 1-d-1. Nonetheless, is there any other questions on the 7 tax rates? 8 COMMISSIONER MOSER: No. 9 JUDGE KELLY: Yeah. I want to try to get 10 some things clear in my mind. We've had big issues with 11 the appraisals. We've been listening to that now for 12 several months. And I know we've had a bunch of appeals 13 on the appraised value. What is the -- what was the 14 percentage increase in appraised values? Taxable 15 appraised values? 16 MR. REEVES: For Kerr County? 17 JUDGE KELLY: Yeah. 18 MR. REEVES: I believe I looked at the sheet 19 the other day. Someplace in the neighborhood of seven. 20 JUDGE KELLY: Seven. Approximately seven 21 percent? 22 MR. REEVES: Approximately. 23 JUDGE KELLY: Okay. 24 MR. REEVES: I'd have to look exactly. And, 25 once again, I was looking at taxable. 15 1 JUDGE KELLY: Right. 2 COMMISSIONER MOSER: Yeah. Seven percent. 3 Pretty good. 4 MR. REEVES: And not necessarily market. 5 JUDGE KELLY: Okay. So the values went up 6 about seven percent, taxable values? 7 MR. REEVES: That's correct. 8 JUDGE KELLY: Okay. And how did that affect 9 our effective tax rate? 10 MR. REEVES: The effective tax rate, here 11 again, it is not apples for apples, if you will. 12 JUDGE KELLY: I understand. 13 MR. REEVES: But our effective tax rate from 14 last year came -- or adopted rate was .515, came down 15 to 4909, which is for your -- and you remember your 16 effective rate applies as well to -- you gotta pay your 17 debt first. So when you come out, that it increased as 18 I said by the 4.9 percent, and if you want to look at it 19 something our maintenance and operations rate, between 20 the two, last year and this years, a hundred thousand 21 dollar house, the maintenance and operations part of our 22 tax rate would increase the tax liability by $15.80. 23 JUDGE KELLY: Okay. But effective tax rates 24 are important for us, especially going into next year. 25 MR. REEVES: Next year the increase by the 16 1 statute is 3.5 percent. Anything over that will be an 2 automatic election to ratify that rate. This year we 3 can go up 8 percent and then it would require a petition 4 to be filed and then an election to be held for the 5 eight -- anything above 8 percent. Anything below 6 8 percent hearings are required but no election for this 7 current tax year. 8 JUDGE KELLY: Right. 9 MR. REEVES: Next year, you go 3.51 percent. 10 JUDGE KELLY: We have to have a voter 11 approval election? 12 MR. REEVES: It will be an election. It's 13 no -- well, if they sign the petition we'll have an 14 election. Technically. 15 JUDGE KELLY: Well, I just want to make sure 16 that I clearly understand. This year we're operating 17 under the old rollback tax rules, right? 18 MR. REEVES: Yes, sir. 19 JUDGE KELLY: And the rollback rate, this is 20 the last year of it, was 8 percent? 21 MR. REEVES: That is correct. 22 JUDGE KELLY: If -- if the taxes increased 23 more than 8 percent -- 24 MR. REEVES: That is correct. 25 JUDGE KELLY: -- we would have what was 17 1 called at that time a rollback election? 2 MR. REEVES: If a successful petition was 3 filed. 4 JUDGE KELLY: Okay. They file a petition 5 then we have to have the election, right? 6 MR. REEVES: Right. Next year -- 7 JUDGE KELLY: Okay. It changes. And we 8 don't call them rollback anymore? 9 MR. REEVES: No. 10 JUDGE KELLY: The legislature has come up 11 with the new improved terms for us to use and it's going 12 to be voter approval election. 13 MR. REEVES: That's correct. No new tax. 14 JUDGE KELLY: And they changed the rate at 15 which those elections are triggered, from 8 percent to 16 three and a half percent. 17 MR. REEVES: For schools and -- I'm sorry 18 not schools. Counties, cities and other non-water 19 district. 20 JUDGE KELLY: As it applies to us it would 21 be three and a half percent. 22 MR. REEVES: That's correct. 23 JUDGE KELLY: And I -- do I understand 24 correctly that this year we have seven percent increase 25 in value just from what KCAD did with the appraisals? 18 1 MR. REEVES: Seven percent, yes. 2 JUDGE KELLY: And so -- 3 COMMISSIONER MOSER: Which is 1.3 million. 4 JUDGE KELLY: That's the 1.3 million that -- 5 that increased revenue? 6 MR. REEVES: In revenue. 7 COMMISSIONER MOSER: Increased revenue. 8 Right. 9 JUDGE KELLY: Those are revenues. Those are 10 not values. That's the increased revenue. 11 MR. REEVES: Correct. 12 JUDGE KELLY: So that 7 percent increase in 13 values has generated 1.3 million dollars in additional 14 revenues for this coming year. 15 MR. REEVES: Yes, sir. 16 COMMISSIONER MOSER: At the current tax 17 rate. 18 MR. REEVES: Correct. 19 JUDGE KELLY: At the current -- at the 20 current tax rate. 21 COMMISSIONER MOSER: Okay. 22 JUDGE KELLY: Is that right? 23 MR. REEVES: That's correct. 24 JUDGE KELLY: Okay. 25 COMMISSIONER MOSER: Let me -- 19 1 JUDGE KELLY: And next year it's going to 2 be -- if we get three and a half percent, we're going to 3 have to deal with the issue of whether to have -- there 4 might be an election? 5 MR. REEVES: If this was one year from 6 today, Judge. 7 COMMISSIONER MOSER: And to put that in 8 perspective, the three -- let me go back to the 8 9 percent. 8 percent says we could increase -- these are 10 just ballpark numbers. These are not Bob's numbers or 11 James -- about four cents, four cents on the tax rate is 12 8 percent, ballpark. We could do that -- 13 MR. REEVES: On the effective rate, 14 Commissioner. 15 COMMISSIONER MOSER: Yeah, effective rate. 16 Effective tax rate. Next year we could be limited to 17 approximately 1.5 cents effective tax rate. 18 MR. REEVES: Correct. 19 COMMISSIONER MOSER: So we -- that's what 20 we'd be limited to. So like last year we increased tax 21 rate from 50 to 51 and a half, so it was one and a half 22 cents. So we -- we hit the limit. 23 JUDGE KELLY: We maxed out last year. 24 COMMISSIONER MOSER: Yeah. 25 MR. REEVES: If I may give an example on 20 1 what -- anticipating this question. Next year's rate 2 would be limited to .50808. 3 COMMISSIONER MOSER: .50 -- 4 JUDGE KELLY: Say that number again? 5 MR. REEVES: .50808. And I took it out as 6 far as I could. 7 JUDGE KELLY: .50 -- 8 MR. REEVES: .50808. 9 COMMISSIONER MOSER: Why -- we'd be limited 10 to that but we're .515 now? 11 MR. REEVES: The effective rate, though, 12 Commissioner. Which are -- 13 COMMISSIONER MOSER: Oh, okay. Effective. 14 That's effective. 15 MR. REEVES: Yeah. Again, remember, this is 16 not normal math. 17 COMMISSIONER MOSER: Yeah. Okay. But if 18 you go back to normal math, okay, to the rate that we 19 have now. Okay. So -- so the three and a half percent 20 would be on effective tax rate? 21 MR. REEVES: That is correct. 22 COMMISSIONER MOSER: Oh. And I was doing it 23 based on the world tax rate. 24 MR. REEVES: Yeah. Yeah. And throw the 25 real world tax rate out. 21 1 COMMISSIONER MOSER: Yeah. 2 MR. REEVES: And it -- and it would go that 3 which -- 4 COMMISSIONER MOSER: Irene, I want to see 5 you write this up, okay? 6 MR. REEVES: -- new revenues under that 7 scenario next year, Judge, would be $628,000. 8 JUDGE KELLY: That would be new revenues on 9 basis of the appraisals for this year? 10 MR. REEVES: If -- if it was in effect 11 today. It would be $628,000 in new revenue versus what 12 we're looking at. 13 COMMISSIONER MOSER: So that's how much we 14 could increase, period. With the new cap. 15 MR. REEVES: That is correct. 16 COMMISSIONER MOSER: 600,000. 17 JUDGE KELLY: About half. 18 MR. REEVES: That is correct. 19 COMMISSIONER MOSER: Yeah. 3.8 is about 20 half of four so -- 21 JUDGE KELLY: And so what we're looking at 22 next year -- we're talking about -- we're here today on 23 this year. But next year, we're going to be looking at 24 a much smaller universe in which to work. 25 MR. REEVES: That is absolutely correct. 22 1 COMMISSIONER MOSER: Okay. Okay. 2 COMMISSIONER BELEW: And why is that? 3 JUDGE KELLY: Because the revenue cap. Our 4 friends in Austin. 5 COMMISSIONER MOSER: That's -- 635,000, 6 that's an important number to remember. 7 COMMISSIONER BELEW: It limits how you do 8 it. 9 JUDGE KELLY: Yes. 10 COMMISSIONER MOSER: Yeah. 11 COMMISSIONER BELEW: And we want to say 12 within that. We want to make sure that -- 13 COMMISSIONER MOSER: We have to. 14 COMMISSIONER BELEW: -- to protect the 15 taxpayers and do what we have to do in the County. 16 JUDGE KELLY: If we have the same situation 17 we have this year with seven percent increase in 18 appraised taxable value, we would believe in a voter 19 approval election cycle if somebody successfully filed a 20 petition. 21 COMMISSIONER MOSER: No, no. 22 MR. REEVES: No. We -- 23 COMMISSIONER MOSER: That's not true. 24 MR. REEVES: -- wouldn't even need -- we 25 wouldn't need the petition. 23 1 COMMISSIONER MOSER: No. 2 JUDGE KELLY: No. It would be 3 automatically -- 4 COMMISSIONER BELEW: It would trigger that? 5 MR. REEVES: Yeah. 6 COMMISSIONER BELEW: So really back to what 7 you said in practical terms, which that would happen, 8 you were right in the first place. That it -- we stay 9 within those restrictions. I don't remember the phrase 10 you used, but -- 11 COMMISSIONER MOSER: Well this year, we 12 would -- well, 8 percent is good. Three and a half 13 percent comes -- 14 JUDGE KELLY: This -- this year, in terms of 15 County governance going forward is an aberration. This 16 is an anomaly. This is the last of an old system. And 17 we can absorb this seven percent increase in appraised 18 values and -- and work it into our budget planning this 19 year. Next year is going to be much, much leaner. Much 20 leaner. That's all I'm saying. 21 COMMISSIONER MOSER: Yeah. But the -- if 22 there was an increase in appraised values next year, 23 that doesn't go into the effective tax rate calculation. 24 MR. REEVES: Yes, it will. 25 JUDGE KELLY: Yes, it will. Always. 24 1 MR. REEVES: The increase -- we -- here's a 2 prime -- put -- boil it down real simple. What we need 3 -- now I'm going to put an economic development hat on. 4 We need more new property coming in than we do increased 5 market value. 6 COMMISSIONER BELEW: And revenue generator. 7 COMMISSIONER MOSER: Right. No, that 8 increased market value. 9 JUDGE KELLY: And translate this for the 10 public. We need to be more like Boerne, and Gillespie 11 County, Kendall County, Medina County, San Antonio West 12 out there. We get that kind of development, then we'll 13 have a much bigger tax rate. 14 COMMISSIONER MOSER: And that brings in a 15 whole other topic of discussion. 16 MR. REEVES: And then the Sheriff would need 17 four more deputies. 18 COMMISSIONER BELEW: And jobs. Jobs and all 19 that. 20 JUDGE KELLY: It's a tradeoff with the 21 quality of life that we have now. 22 COMMISSIONER MOSER: You said the right 23 words, quality of life. 24 JUDGE KELLY: Yeah. 25 COMMISSIONER BELEW: Well, just -- just for 25 1 the record, I -- I don't think it's a good idea to 2 always depend on homeowner property for revenue. I 3 would like to see us have commercial property for 4 revenue. And that would be the counterbalance to this. 5 COMMISSIONER MOSER: Just for the record 6 then also, as long as you don't screw up quality of 7 life. Okay. There's -- that's a whole big issue. 8 COMMISSIONER BELEW: You can't -- you can't 9 keep -- people have to have jobs. And you can't just 10 always have the tax -- the homeowner paying for 11 everything. 12 COMMISSIONER MOSER: If it's quality jobs, 13 true. If it's minimum wage jobs, workforce, no housing 14 for that, it's the biggest -- I've got another subject 15 discussion on tax rate, if I may. 16 I asked James to calculate something. Say 17 what if -- go to the far right-hand column over there, 18 where we -- our reserve, if we kept our total general 19 funds, reserve at 25 percent, which is what the goal 20 would be. That's even, you know -- 21 COMMISSIONER BELEW: It's 2595? 22 MR. ROBLES: Yeah. 23 COMMISSIONER MOSER: No, I'm looking at 24 25.04, okay? Just looking at that number, okay? And so 25 what would that mean as far as general revenue reserve 26 1 and it comes out about 26 percent, Okay? How can -- 2 what can we do? What would the tax rate be with no 3 change in expenditures? In other words, whatever the 4 departments have, whatever we said, this is what we want 5 to have. So what would the tax rate be to do that? It 6 would be .502, as opposed to .515 where we currently 7 are. So that's about a penny less. It's about a penny 8 less tax rate. 9 And so I just wanted to do that just to see 10 what that would be since we got -- we had increased 11 revenue for 1.3 million, we've had increased 12 expenditures. But doing that also increases, and it's 13 something we're all concerned about, it increases the 14 deficit from 1.8 million to 2.2 million. 15 JUDGE KELLY: That's just the general. 16 COMMISSIONER MOSER: That's just the 17 general, the general fund. 18 JUDGE KELLY: That's the general fund. 19 That's not the total deficit. Right. 20 COMMISSIONER MOSER: I know. I know. But 21 I'm just trying to do apples and apples. Okay. We can 22 take another line item. Okay. Because all these other 23 things are different -- different things. So I thought 24 what would that do. Well, we could increase -- we could 25 decrease the tax rate by one penny, still meet our 25 27 1 percent goal for reserve. But we have got the three and 2 a half percent facing us next year, okay, which we need 3 to consider. Okay. So having a higher reserve to me 4 is -- is a good thing to do in light of the limits we're 5 going to have next year -- 6 JUDGE KELLY: Agreed. I think we all agree 7 on that. 8 COMMISSIONER MOSER: -- on -- on three and a 9 half percent. So I'm just looking -- 10 JUDGE KELLY: The more money we have in the 11 bank, the better it is. 12 COMMISSIONER MOSER: And that's what it is. 13 So that would be more money in the bank. But if you put 14 more money in the back for mid next year, you can't use 15 it accept for extenuating circumstances. You can't use 16 it to pave a road or put in new playground equipment or 17 something like that. Or you could for other things. I 18 forgot what James said the two conditions were. But it 19 would be very restricted. 20 But you can take that and roll it over into 21 the next year into the reserve -- I mean into our 22 budget, which would be good. And I think that's what 23 we've all been talking about here, is if we're limited 24 and we have some expenses, it's nice to have a bank 25 account that's got more. 28 1 JUDGE KELLY: James, can you explain to me 2 what it is that he's proposing here? 3 COMMISSIONER MOSER: I'm going to -- I 4 object to that. 5 JUDGE KELLY: What is Commissioner Moser 6 talking about? I want him to explain to me what we're 7 doing. 8 COMMISSIONER MOSER: These are his numbers. 9 JUDGE KELLY: Well, I know he ran the 10 numbers. 11 COMMISSIONER HARRIS: Commissioner, I was on 12 the same page with you -- 13 COMMISSIONER MOSER: Yeah. 14 COMMISSIONER HARRIS: Until we looked at the 15 restrictions next year. And so, anything we can do to 16 maintain that 25 percent and lower the tax rate, I was 17 for. But next year it's kind of -- 18 COMMISSIONER MOSER: It's an e-mail I sent 19 to James this morning, it said what if? I just want to 20 look at it. 21 MR. ROBLES: This is a hypothetical 22 situation to see what the tax rate would be, what our 23 deficit would be, if we targeted at 25 percent reserve. 24 I think you're all in agreement that that may not be the 25 best thing to do because it would increase our deficit 29 1 significantly and put us, you know, behind the eight 2 ball going into next year when we have the revenue cap. 3 But this is just a theoretical situation to look at and 4 see what the numbers would be and what situation we 5 would end up at. 6 COMMISSIONER MOSER: Here's the reason I did 7 it, I said, look, if -- my ballpark was we could do 8 about a one percent -- one cent decrease. School 9 District did a one cent decrease, the City's proposing a 10 one cent decrease. So I wanted to see what it would do 11 to the County. We can do it and still maintain our 25 12 percent. But it affects -- it impacts our reserve for 13 the following year. So I'm not proposing this, I just 14 wanted to put it on the table to say that -- 15 JUDGE KELLY: It's worth looking at. 16 COMMISSIONER MOSER: -- that it's worth 17 looking at. I'm not in favor of it. Okay. But we've 18 got it there. We can look at it and we can discuss it 19 if there's any other discussion. But I'm -- I'm not 20 proposing -- I'm still with .515. 21 JUDGE KELLY: Okay. 22 COMMISSIONER MOSER: End of discussion. 23 JUDGE KELLY: I think I misunderheard -- I 24 know, I made that word up. But I've made it up my whole 25 life so it works. I wasn't sure if you said affect or 30 1 infect the deficit. And quite frankly, from my point of 2 view that deficit is an infection. 3 COMMISSIONER MOSER: An infection. Okay. 4 Yeah. 5 JUDGE KELLY: So I -- I would add that to 6 the conversation. 7 COMMISSIONER MOSER: I wouldn't argue with 8 that at all. 9 MR. REEVES: Nonetheless, whatever tax rate 10 for this -- we're proposing the tax rate does not 11 require any specific wording when we adopt it. It will, 12 but it will require a record vote, Judge. 13 COMMISSIONER MOSER: Right. Okay. 14 JUDGE KELLY: I understand. 15 COMMISSIONER MOSER: Okay. 16 JUDGE KELLY: In terms of -- 17 COMMISSIONER MOSER: Good discussion. 18 JUDGE KELLY: -- my comments on the tax 19 rate. Everyone knows that I'm concerned about the 20 deficit budget. And I don't want to get side-tracked by 21 talking about a deficit budget, I want to stay focused 22 on the tax rate. But because we do have even -- even at 23 our existing tax rate, if you look on the schedule that 24 James provided us, down at the bottom, that's a 25 $2.8 million deficit budget. But everything on the 31 1 bottom half of that page are things that we really don't 2 have a lot of control over and so I looked at totaling 3 up the -- those first three subtotals. The general 4 fund, the debt service, and the road and bridge. And if 5 I add those together, it comes to about 20 -- 2.6 6 million. Is that ballpark right, James? 7 MR. ROBLES: 2.55, yeah. 8 JUDGE KELLY: Something like that? 9 MR. ROBLES: Yeah. 10 JUDGE KELLY: And -- and with that kind of 11 deficit, I'm nervous about lowering tax rates. When I 12 go back up to the top of the page and look in that far 13 column with regard to the reserve balance, the general 14 fund reserve balance, what we have right now is we would 15 have approximately $7.745 million dollars in the bank 16 account. Am I reading that right, James? 17 MR. ROBLES: 7.453. 18 JUDGE KELLY: Right. 19 COMMISSIONER MOSER: Uh-huh. 20 MR. ROBLES: Oh, are you looking at the 21 total of the general fund or -- 22 JUDGE KELLY: The total of the general fund. 23 MR. ROBLES: Okay. 24 JUDGE KELLY: That 7.7 something represents 25 our savings, right? 32 1 MR. ROBLES: Yes, sir. 2 JUDGE KELLY: And we try to keep at least 3 three months of operating cost in our savings account. 4 That's where the 25 percent comes from. And that's -- 5 that's pretty much TAC and state guidelines to try to 6 have that in there. It drops below that. Some counties 7 have it substantially above that. Last year we had it 8 substantially above that and that was part of the basis 9 for adopting the deficit budget as I recall. Is that 10 correct, James? 11 MR. ROBLES: I believe so. 12 JUDGE KELLY: Because we had -- we had more 13 than 25 percent in savings and so we spent some of that 14 to be able to operate the County this past year as part 15 of our deficit budget from last year. But the funds -- 16 those funds are gone. And so now we're down -- this is 17 good to be able to have almost 27 percent in the bank. 18 I'm pleased with that. Going into the lean year that's 19 coming up, that's why I was talking about the three and 20 a half percent revenue cap that the legislature imposed 21 on us. We're going to be tight for money next year. 22 And so I'm not comfortable lowering the tax rate, even 23 though the public has already been hit with a seven 24 percent increase, taxpayers have already got that. 25 There's nothing we can do about it. And we benefited 33 1 from being able to have those revenues for this budget. 2 But at the same time, I'm uncomfortable 3 lowering the tax rate when we know that we're going to 4 have this big a deficit. So as much as I would like to 5 lower it, I just don't think it's prudent under the 6 circumstances with what we're facing. 7 COMMISSIONER MOSER: Yeah. We can put it -- 8 put it in -- and I agree with you. But just to put it 9 in perspective, so the savings we'd have would -- it 10 would go down from 7.7 million, according to that 11 reserve for the 5.515 tax rate, it would go down 500,000 12 to 7.3, okay, 7.2. 13 JUDGE KELLY: That's exactly correct. And 14 given -- given the choice, I would rather have the extra 15 half million dollars in the bank when I've got $2.8 16 million deficit budget. 17 COMMISSIONER MOSER: And I agree with you. 18 But we got the numbers there we can look at. So -- 19 JUDGE KELLY: Yes, sir. Sheriff? 20 SHERIFF HIERHOLZER: I think one thing when 21 you're talking about lowering tax rate that you have 22 to -- kind of going off what Commissioner Moser says, 23 that you have to look at it when it comes to County 24 government, too, is number one, your school districts 25 this year are getting a lot greater funding from the 34 1 State. Well, they've got another source that's 2 forthcoming, a lot, so they can afford to lower the 3 other. 4 Kerrville, does what they've done a lot of 5 times. They're lowering it, but if you read that 6 article this morning, the water rates are going to go up 7 anywhere from 1.70 something to two dollars and 8 something. 9 COMMISSIONER BELEW: And that's their cash 10 cow. 11 SHERIFF HIERHOLZER: And that is -- if you 12 watch -- and I -- you know, I watch mine. But with the 13 City, if you watch them, towards the end of next budget 14 year they will transfer over a million easy out of that 15 water and sewer into their general fund. So even though 16 they're saying we're lowering the tax rate, they're 17 raising it because they're raising your water and sewer. 18 COMMISSIONER MOSER: Right. 19 SHERIFF HIERHOLZER: And I'm not dinging 20 them, that's just the way the City Government works and 21 that's the way the State Government works. But what 22 happens is -- 23 JUDGE KELLY: But what you're -- what 24 you're -- 25 SHERIFF HIERHOLZER: -- the counties don't 35 1 have that capability to raise other fees -- 2 COMMISSIONER BELEW: Right. 3 COMMISSIONER HARRIS: Good point. 4 SHERIFF HIERHOLZER: -- so you're stuck with 5 only -- 6 JUDGE KELLY: We understand the point. 7 COMMISSIONER MOSER: Good point. 8 JUDGE KELLY: And the public needs to 9 understand that, too -- 10 COMMISSIONER MOSER: Good point, Sheriff. 11 JUDGE KELLY: -- we can't charge fees like 12 the City can. 13 SHERIFF HIERHOLZER: Like they can or the 14 schools are getting it from the State. 15 JUDGE KELLY: And as a corollary on that, if 16 you read that article, the City's tax rate was 55 cents 17 and ours is 51 and a half. And they're lowering it to 18 54. They're still several cents above us. 19 COMMISSIONER MOSER: And with additional 20 revenue. Other revenue sources. 21 JUDGE KELLY: And other sources of revenue. 22 SHERIFF HIERHOLZER: And the population is 23 greater out in the county and, you know, a lot of your 24 stuff isn't paid for. It's not double taxed like a lot 25 of people think. 36 1 JUDGE KELLY: Well, I just want the public 2 to understand that we're going into leaner times. If we 3 were going to do a Game of Thrones analogy, winter's 4 coming. Okay. Winter is coming. It's going to be a 5 tough year next year. And probably for the next several 6 years. And so, I like to go into it prepared. And 7 having more money in the bank, to me, is the most 8 prudent thing to do. And so as sympathetic as I am to 9 what the taxpayers have already been hit, I'm not 10 prepared to jeopardize having to go in and have a major 11 election at this point just to be able to have the money 12 to run the County government. 13 COMMISSIONER BELEW: Because that costs 14 money. 15 JUDGE KELLY: The election costs money. But 16 we run the risk that if -- if the voters don't approve 17 what we need to run the government, then we have to 18 reduce governing. 19 COMMISSIONER BELEW: I think that's a 20 foregone conclusion anyway. Who goes and votes for more 21 taxes. If there's an election -- 22 JUDGE KELLY: We passed the bond issue for 23 the jail. 24 COMMISSIONER BELEW: That was very well 25 explained, by the way. I've said that over and over 37 1 about the Sheriff. If three people were gathered on a 2 corner, he stopped and made a speech about it. 3 SHERIFF HIERHOLZER: I did. 4 COMMISSIONER BELEW: So he sold it and sold 5 it and sold it, which is good. 6 I have a question for James. What are the 7 two things we can go into the reserves for? 8 MR. ROBLES: It has to be a grave public 9 necessity, and be unforeseen and unanticipated 10 expenditure. 11 COMMISSIONER BELEW: Okay. Now, that does 12 shade my view of what you're saying, Judge, because 13 while we have those reserves, we have an extra half a 14 million dollars in reserve, there's still a restriction 15 on what it can be used for. 16 COMMISSIONER MOSER: Midyear. Or end of the 17 year, end of budget year. 18 COMMISSIONER BELEW: So just bear that in 19 mind, it's not just -- it's not just money in the cookie 20 jar. 21 COMMISSIONER MOSER: He's saying that about 22 next year. He -- 23 JUDGE KELLY: But that's -- that's money for 24 2021-2022. 25 COMMISSIONER MOSER: Right. 38 1 JUDGE KELLY: We're going to be depleting 2 our savings accounts. 3 COMMISSIONER BELEW: I -- I know that. I'm 4 just saying there are two reasons you can go into it and 5 to bear that in mind, that's all. 6 COMMISSIONER MOSER: And if -- 7 JUDGE KELLY: We're not looking to go into 8 it this year. 9 COMMISSIONER BELEW: Well, I hope we don't 10 go into it at all. 11 JUDGE KELLY: I understand. But the more -- 12 the more we -- the more money we have in the bank 13 starting these drought years, and we'll just call them 14 drought, I think most people in the County will 15 understand we're getting ready to go into a financial 16 drought, the better off we are. That's my philosophy on 17 it. 18 COMMISSIONER MOSER: Okay. 19 JUDGE KELLY: So, do we have any other 20 discussion about tax rate? 21 COMMISSIONER HARRIS: No, I'm with you. I 22 mean it -- 23 JUDGE KELLY: We've been doing most of the 24 talking. Any other input on the tax rate before we take 25 our record vote? You know, just speak now or forever 39 1 hold your peace. 2 MR. REEVES: Actually, no. We're good to 3 the speak now or later. 4 JUDGE KELLY: And we have -- we have two 5 more hearings after today. So is everybody ready to 6 vote? 7 COMMISSIONER MOSER: Yes. 8 JUDGE KELLY: Okay. Then I'm going to call 9 Commissioner Precinct 1. 10 MR. REEVES: We need a motion. 11 JUDGE KELLY: Oh. I'll make the motion that 12 we maintain the present tax rate of 51 and a half cents 13 per hundred dollar valuation. 14 COMMISSIONER HARRIS: I'll second that. 15 COMMISSIONER MOSER: You second? 16 COMMISSIONER HARRIS: Yeah. 17 COMMISSIONER MOSER: Okay. 18 JUDGE KELLY: I made the motion, it's been 19 seconded by Commissioner Harris that we maintain the 51 20 and a half cent tax rate per hundred dollar valuation. 21 Is there any other discussion? 22 COMMISSIONER BELEW: Yes. 23 JUDGE KELLY: Okay. 24 COMMISSIONER BELEW: I feel like I'm between 25 the dog and the fire plug, and so I will vote yes. 40 1 JUDGE KELLY: Okay. So Commissioner 2 Precinct 1 votes yes. 3 Precinct 2. 4 COMMISSIONER MOSER: Yes. 5 JUDGE KELLY: Commissioner Precinct 2 votes 6 yes. 7 Four. 8 COMMISSIONER HARRIS: Yes. 9 JUDGE KELLY: Commissioner Precinct 4 votes 10 yes. And the County Judge will vote yes. So that would 11 be a four zero, unanimous vote of the Commissioners' 12 Court with Commissioner Letz being excused absence. 13 Thank you, Mr. Reeves. 14 MR. REEVES: Thank you, Judge. Thank you 15 Commissioners. 16 JUDGE KELLY: So item 1.2(sic) on the agenda 17 is consider, discuss and take appropriate action to set 18 the date and time for the adoption of the 2019 Kerr 19 County and Lateral Roads tax rate. To set the date and 20 time for adoption, which I believe we have on the 21 calendar is what, September 23? 22 MR. REEVES: I believe it's your next two 23 meetings, public notices along with a brief summary of 24 the calculations I give you, I must publish them ten 25 days before the first public hearing. So I believe we 41 1 said the -- 2 MR. ROBLES: The first public hearing on the 3 proposed tax rate is Monday, August 26th. I don't know 4 if we have an exact time for that on our calendar. 5 MR. REEVES: I would -- 6 JUDGE KELLY: I think that's a regular 7 commissioners meeting. 8 COMMISSIONER HARRIS: It is. 9 JUDGE KELLY: It's a regular meeting at 10 9:00. 11 MR. REEVES: I just need to know the actual 12 time. 13 JUDGE KELLY: So the first public hearing 14 will be August 26th, 9:00 a.m. 15 MR. ROBLES: That works. 16 JUDGE KELLY: And then the second one is 17 what, James? 18 MR. ROBLES: Second public hearing is 19 September 9th, Monday. 20 JUDGE KELLY: And that is also a regular 21 Commissioners' Court meeting, right? 22 MR. ROBLES: I believe so. 23 JUDGE KELLY: So that will be at nine 24 o'clock. And then we will adopt the final -- 25 MR. REEVES: That's the next item. 42 1 JUDGE KELLY: Yeah. Okay, 1.3 -- 2 MR. REEVES: Well, we need to -- 3 COMMISSIONER MOSER: Yeah, set the hours. 4 JUDGE KELLY: Okay. 5 COMMISSIONER MOSER: I make a motion that we 6 set public hearings for August 26th at 9 a.m. concerning 7 setting the tax rate, is that right? Yeah, the 2019 tax 8 rate, okay? And is it 2019 or 2020? 9 MR. REEVES: It's actually the 2019 tax 10 rate. 11 COMMISSIONER MOSER: Okay. So my motion is 12 correct? 13 MR. REEVES: Collecting the 2019 taxes. 14 COMMISSIONER MOSER: And the second public 15 hearing is September the 9th at 9:00 a.m. for the second 16 public hearing to set the 2019 tax rate. 17 COMMISSIONER BELEW: Second. 18 JUDGE KELLY: Commissioner Moser has made 19 the motion to set the public hearing dates for August 20 26th and September 9 for the 2019 tax rate, and seconded 21 by Commissioner Belew. Any further discussion? Does 22 this have to be a record vote? 23 MR. REEVES: No, sir. 24 JUDGE KELLY: Okay. So those in favor raise 25 your hand. Unanimous, four zero. 43 1 Now 1.3. We've got you at the podium. 2 MR. REEVES: Yes, sir. 3 JUDGE KELLY: So 1.3 is consider, discuss 4 and take appropriate action to set the date and time for 5 the adoption of the 2019 Kerr County and Lateral Roads 6 tax rate. And that would be September 23? 7 MR. REEVES: Yes, sir. I would suggest 8 September 23 and -- and if we could add the time as 9 well. 10 JUDGE KELLY: Okay. We'll do nine o'clock, 11 September 23. 12 MRS. GRINSTEAD: I think -- I'd have to 13 look, but I think we have to adopt the budget before we 14 do the tax rate so maybe do a little later because we'll 15 have other things lined up. 16 MR. ROBLES: That's correct. 17 MRS. GRINSTEAD: I mean unless we do 18 everything at nine o'clock, which is fine but -- 19 JUDGE KELLY: Well, let's talk about it just 20 a second. All of these public meetings that we're 21 talking about and final hearings that we're going to 22 have are regularly scheduled Commissioners' Court 23 meetings. Should we set them at 10 o'clock rather than 24 nine o'clock to give us time to do any conditions 25 preceding that have to be done? 44 1 MR. REEVES: The first two, Judge, are just 2 public hearings. 3 COMMISSIONER MOSER: Yeah, yeah. Correct. 4 JUDGE KELLY: Just public hearings? 5 COMMISSIONER MOSER: Right. 6 MR. REEVES: Yes, sir. 7 JUDGE KELLY: Okay. So for this one for the 8 September 23, do we want to just go ahead and set it at 9 10 o'clock? That gives us plenty of time to do whatever 10 needs to be done in order for that -- that hearing to be 11 ripe. 12 COMMISSIONER HARRIS: That would be prudent. 13 COMMISSIONER BELEW: Okay. So September 14 23rd, 10:00 a.m. 15 COMMISSIONER MOSER: So you going to make 16 that motion? 17 JUDGE KELLY: Yeah. I'm going to move that 18 we set it for September 23 at 10:00 a.m. 19 COMMISSIONER HARRIS: Second. 20 JUDGE KELLY: And it's been seconded by 21 Commissioner Harris. Any further discussion? Those in 22 favor raise your hand. Four zero, unanimous. 1.4 -- 23 MR. REEVES: Thank you. 24 JUDGE KELLY: Mr. Reeves, thank you. I know 25 this has been a difficult year. We really appreciate 45 1 your efforts. 2 MR. ROBLES: Okay. In front of you you 3 should have this page. This is the notice of proposed 4 salary increases for elected county and precinct 5 officials for fiscal year 19-20. We have a list of 6 elected officials at their present salary with certain 7 state supplement and present allowances for travel, 8 along with a column of proposed salaries for fiscal year 9 19-20. This includes a two percent proposed cost of 10 living adjustment as well as any longevity assessed and 11 local supplements and proposed travel as well. So we 12 haven't built in the two percent COLA and about four or 13 five of the elected officials will receive longevity. 14 Pursuant to local government Code 152.013, 15 we are required to publish this in the papers at least 16 ten days prior to when the meeting to set the official 17 salaries are. And the meeting to set the official 18 salaries are Monday, September 9th, that gives us 26 19 days to publish this. And we will try to get this in 20 the paper by the end of this week or early next week to 21 give us plenty of time to meet that deadline. 22 JUDGE KELLY: So we need -- what do we need 23 to set on September 9th? 24 MR. ROBLES: September 9th we have a -- at a 25 regular meeting of Commissioners' Court, a vote to set 46 1 salaries, expenses, and other allowances of all elected 2 County and Precinct officers, which is going to be this 3 page you're looking at now. 4 JUDGE KELLY: And I will so move. 5 COMMISSIONER MOSER: Second. 6 JUDGE KELLY: I made a motion, it's been 7 seconded by Commissioner Moser, to set the hearing for 8 the proposed salaries for elected officials for 9 September the 9th. Do we need to set a time? It's on 10 that docket -- on that agenda? 11 MR. ROBLES: Do you to want to do ten 12 o'clock? 13 JUDGE KELLY: Ten o'clock. Give us a little 14 cushion. Okay. Those in favor raise your hand. 15 Unanimous, four zero. 16 1.5 consider, discuss and take appropriate 17 action to review, finalize and authorize the filing the 18 proposed budget for fiscal year 2019 and '20. 19 MR. ROBLES: I have provided you all the 20 budget summary. There have been -- there was only two 21 changes made prior to this meeting in the last budget 22 workshop we had. They offset each other, $5,000 from 23 the Sheriff's capital to move into his -- 24 SHERIFF HIERHOLZER: Oh, radio equipment. 25 MR. ROBLES: Radio equipment, yeah. 47 1 SHERIFF HIERHOLZER: The 5,000, yeah. 2 MR. ROBLES: It did not -- it did not change 3 any of the numbers on here since it was a wash and it 4 was in the same department, same funds. 5 Using the .515 total tax rate, this will 6 still generate a general fund deficit of 1.65 million. 7 Total general fund deficit of 1.78 million, leaving a 8 total general fund estimated ending reserve of 26.65 9 percent as of 9-30-2020. 10 COMMISSIONER MOSER: I move that we 11 authorize the filing of the proposed budget as just 12 delineated by the Auditor for fiscal year 2019, 2020. 13 COMMISSIONER HARRIS: Second. 14 JUDGE KELLY: Motion been made by 15 Commissioner Moser, seconded by Commissioner Harris, to 16 approve the proposed finalized budget. Any further 17 discussion? 18 Well, I'm going to say something. The first 19 thing I want to say is that I don't want anyone to 20 interpret what I'm about to say as being critical of 21 anyone working with the County. We have great 22 employees, we have great elected official, this is an 23 outstanding team, this is probably the best place I've 24 ever worked, other than just on my own. Which I kind of 25 liked, but it's part of a team. 48 1 COMMISSIONER BELEW: You didn't have to 2 learn up and over then, or all the fancy math and -- 3 JUDGE KELLY: No. No. But also when I was 4 in private practice, I didn't spend money I didn't have. 5 And we're spending money we don't have. We're spending 6 money that we don't even project we're going to have 7 revenues to cover. And that's a concern. I have -- 8 I've been up since four o'clock this morning, worrying, 9 praying, trying to figure out how are we going to meet 10 this obligation. Once we adopt this budget and we 11 authorize these departments and offices to spend this 12 money, we're responsible for raising that money. And we 13 don't have it. And that worries me. It not your fault. 14 I'm not blaming the County at this point. 15 I'm always -- I always go back to Einstein's 16 definition of insanity. And that's when you expect 17 different results and keep doing the same thing over and 18 over again. I sat for two years out there in those blue 19 seats and I watched this process. And if I were still 20 in the blue seats, I can guarantee you, my Suburban 21 would be packed, the dogs would be in it and we would be 22 headed to New Mexico to the beach because this is so 23 brutal an experience. And it's always -- it's a 24 terrifying experience when you adopt a deficit budget. 25 Having said that, I am not an 49 1 obstructionist. I am a pragmatist. A principled 2 pragmatist. There's an oxymoron for you. We have to 3 have a budget. We have to run the government, the 4 County government. We have sworn duties to do that. 5 And so I'm not trying to block this budget, this budget 6 is what it is, but it's the same thing we did the last 7 two years that I sat out there. And -- and talking with 8 others that have been on the court much longer than I 9 have, I think this is the way its been done ever since 10 you've been here. And probably since you've been here, 11 Commissioner Moser? 12 COMMISSIONER MOSER: Yeah. 13 JUDGE KELLY: This is the Commissioners' 14 Court way, to adopt these deficit budgets. If we keep 15 doing this, we can't expect different results. That 16 would be crazy. So if we want things to change, we have 17 to start somewhere. It's not this year. I'm just 18 announcing that I want to change next year. I'm not 19 going to vote against this budget. Nor am I going to 20 vote for it. Because in my heart, I don't believe it's 21 right. And I want to do the best we can to at least 22 start moving toward more of a balanced budget. I'm not 23 saying we're going to get there. We didn't get to where 24 we are, at $2.8 million deficit budget this year 25 overnight. And we're not going to get out of this jam 50 1 overnight. I'm a realist. I'm a pragmatist about that. 2 But if we don't start, it will never happen. And the 3 people deserve better. 4 Because what we're doing, in my opinion, and 5 I've used the metaphor before of musical chairs. I'm 6 going to use a different one today. This is like 7 playing Russian roulette with the taxpayers' money. If 8 we can't -- if -- and -- and the explanation always 9 comes back to, we adopt a deficit budget because our 10 employees are so good that they give us back money at 11 the end of the year. 12 And I know we're -- I've talked with James 13 about this just yesterday, and your estimate is about 14 1.7 million that we're hoping will be left over from 15 last year's budget. So if the deficit is not as big, we 16 could offset it with that 1.7. But it's still a 17 deficit. And so now we have increased it up even 18 higher. And we're relying on the efficiency of our 19 personnel to be able to save us some money to give us 20 back next year. But if they don't, if the music stops 21 and we have to pay this, we don't have the money. We 22 don't have the money to pay it. 23 And so the uncertainty of not knowing 24 whether or not there's going to be a bullet in that 25 chamber or not is frightening to me. It keeps me awake 51 1 at night. So, again, I'm a realist. I'm going to 2 abstain on this vote. Just to give you my explanation 3 why. I want to work shoulder to shoulder with everybody 4 here to do the best we can to not only put the budget in 5 place, but to live within it, and hopefully be able to 6 realize some refund in what we're budgeting this year. 7 But I'm also a realist that the year that we can't do 8 that is going to be a train wreck. 9 And I think the taxpayers deserve better 10 than to live year to year not knowing that there's going 11 to be a train wreck. I think we need to get a better 12 handle on our budget. That's my soapbox speech, I'm 13 sorry, that's where I am. 14 COMMISSIONER MOSER: That's okay. 15 COMMISSIONER HARRIS: Well, Judge, I agree 16 with you. We're just going to have to start early. You 17 know, I sat out there, not two years, but one year and 18 watched this process. It's a lot more understandable 19 now after sitting up here. But we're going to have to 20 start earlier rather than in the spring to work towards 21 that. 22 COMMISSIONER MOSER: Start in July. 23 COMMISSIONER BELEW: Well, I'm going to vote 24 because I'm a participant, and every one of us here -- 25 COMMISSIONER MOSER: Well, wait a minute. 52 1 Why -- 2 COMMISSIONER BELEW: Let me -- let me 3 finish. 4 COMMISSIONER MOSER: What are we voting on? 5 COMMISSIONER BELEW: Every one of us here -- 6 well I'm just saying this, I'm on board with this 7 budget. 8 COMMISSIONER MOSER: Okay. 9 COMMISSIONER BELEW: You had as much 10 participation as any of us. 11 JUDGE KELLY: Absolutely. And I own it. 12 COMMISSIONER BELEW: Okay. But you're -- 13 but now you're going to abstain. And I understand that. 14 And I understand the conflict of -- 15 JUDGE KELLY: Now I'm -- 16 COMMISSIONER BELEW: -- but I just want to 17 remind you that you had as big a participation in it as 18 anybody. 19 JUDGE KELLY: Yes, I did. And I'll tell you 20 what, I'm sending a message. I'm sending a message to 21 you, I'm sending a message to this Court, I'm sending a 22 message to this Courthouse, I'm sending a message to the 23 public, we have to change our ways. Period. 24 COMMISSIONER BELEW: Yeah. How do we do it? 25 JUDGE KELLY: Well, next year. I'm not 53 1 trying to do it this year. I'm announcing we're going 2 to try to do it next year. 3 COMMISSIONER MOSER: And I think that's a 4 good goal, but that's not what we're voting on. So it's 5 -- it's -- I -- I agree with your philosophy of zero 6 based budget or balanced budget. That's good. 7 JUDGE KELLY: Not zero base budget. 8 COMMISSIONER MOSER: Well, balanced. 9 Balanced. 10 COMMISSIONER BELEW: Zero would be great. 11 COMMISSIONER MOSER: Not zero based; 12 balanced budget, long term. Sound like Biden, don't I? 13 A balanced budget. So I agree with that. It will be -- 14 we probably won't get there, but it's a good goal, okay? 15 And just for the record, okay, we -- and as 16 the Sheriff has pointed out and everybody else, it's all 17 on -- you don't fulfill all the salaries full year to 18 what's there, there's other things that happen. And -- 19 and if you came down to a crunch, I've been there many 20 times in my previous life, we're short a hundred million 21 dollars, what are we going to do? Well, you go get 22 smart and figure out how to cut -- cut the expenditures. 23 That can be done also. That can be done. 24 So you don't buy a new dump truck this year 25 like we planned, you put it off until next year. Or you 54 1 don't buy six new vehicles for the Sheriff, put it off 2 to next year. Those kinds of things can be done also. 3 Now, does that affect the public? Yeah, it does because 4 the services that could be questioned. So there -- 5 there's some other variables in there. But I think 6 going in the year, next year, and that's what you're 7 speech was about going into next year -- 8 JUDGE KELLY: Yeah. 9 COMMISSIONER MOSER: -- trying to get to 10 that I think is really a good objective. And I hope we 11 can make it, okay? 12 COMMISSIONER BELEW: It -- it would be 13 great. 14 COMMISSIONER MOSER: I've -- like I said 15 earlier, I tried it six years ago every single 16 department zero, zero, zero, zero, and I didn't win but 17 we came out okay. But it's a good -- it's a good 18 effort. Because you can challenge -- we went through 19 line items this year really, really quick. Used to we'd 20 go through in a lot more detail. But it was looking at 21 last year versus this year. And I think all departments 22 did a fantastic job. So -- that's my speech. 23 JUDGE KELLY: Sheriff? 24 SHERIFF HIERHOLZER: I take a little bit 25 different view. I admire what you said and I think it 55 1 would be great if we could have a balanced budget. But 2 one thing I've learned in 39 years of sitting here, and 3 doing it in this Court, is I think the County has messed 4 up over the years in a lot of ways. We're at the point 5 now to where if you want a balanced budget that we go 6 into, I cannot prepare a budget and I don't think any 7 elected official can without counting the salaries of 8 each employee I'm authorized to have, okay, because that 9 messes up FICA, retirement, medical. Salaries are over 10 85 percent of this County's entire budget easy. 11 JUDGE KELLY: That's right. 12 SHERIFF HIERHOLZER: Okay. So if you want a 13 balanced budget, the only way you're going to do that 14 with the tax rate we're at is to cut staff. It's not 15 going to happen any other way, okay? You take the 16 Sheriff's Office, for example, we're running six 17 officers per shift if I'm lucky. That's 1100 square 18 miles with a population that's greater than the City of 19 Kerrville, although I run less than the number of 20 officers on a shift than the City of Kerrville is 21 running. Okay. 22 When you start looking at that -- where we 23 have messed up, gentlemen, over the years, you know, I 24 can't help it that our jail now has 328 beds. It's not 25 anything any of us wanted, but it's happened. And it's 56 1 because of society, it's because the county's grown, 2 population is grown, roads have grown, everything has 3 grown and it's going to cost money. 4 (Commissioner Moser not present.) 5 SHERIFF HIERHOLZER: If you wanted a 6 balanced budget and we worked at it every year, we would 7 have raised taxes a little bit every year to meet what 8 the needs are. I'm not saying fluff. Because over the 9 last ten years, especially, I've seen this -- y'all, 10 that group up there, cut the fluff out of the County 11 budget drastically. There were a lot of things that 12 Road and Bridge currently has where they've got vehicles 13 with several hundred thousand miles on them. I'm 14 driving vehicles with several hundred thousand miles on 15 them, okay? Or well over a hundred thousand. 16 When I look at Medina County, some of those, 17 they hit 80,000, they're getting rid of them. We've 18 already been pushed to hold these vehicles longer. 19 We've already been -- but we don't have like 20 Fredericksburg tourism income, okay, or Kendall County 21 tourism and, you know, commercial income. Like Harley 22 said, you know, we're stuck. 23 It comes off the homeowners, me included. 24 And we've got a lot of ranches that are the d-1 exempt, 25 you know, the Ag exempt that don't have it. And so 57 1 we're stuck in how we raise money. We're not like the 2 City and can raise other fees. And, unfortunately, the 3 only way you can raise money to meet our needs is raise 4 taxes, or you're going to cut government. Is it going 5 to be like some counties where if you want to call to 6 report a burglary or report a theft that occurred, we 7 tell you fine, go online and fill this out and call your 8 insurance company. Because that's what it's going to 9 amount to when you start cutting that personnel. 10 You know, I got over 70 miles probably of 11 interstate. You know, we've got all kinds of stuff 12 going. We're already barely doing it with the number of 13 people that we have, you know. 14 JUDGE KELLY: I appreciate it. 15 SHERIFF HIERHOLZER: I appreciate you need 16 balance. I don't have any problem with that, okay? But 17 that's also why we have reserves. You do have reserves 18 to look at that, you got that money in your quote 19 savings account to make up for the lean and the hard 20 times. 21 But that's where this Court has done real 22 well. It may have been a deficit budget, but that 23 deficit budget was to keep taxes down. And in doing 24 that, then with all the department heads and other 25 elected officials that all -- we all work as a team, 58 1 keeping that together it ends up being balanced at the 2 end of the year, okay? 3 So I don't look at it as a deficit budget as 4 long as every one of us are working as a team as we have 5 for years to do it, because the government's got to 6 grow. You've got to have officers, you've -- 7 COMMISSIONER MOSER: But it -- but it is a 8 risk and the Judge is right about that. It is a risk. 9 JUDGE KELLY: If we have a year where we 10 have a hundred percent staffing, if we have a year were 11 all positions are staffed all year long, then we're 12 looking at this right here. 13 SHERIFF HIERHOLZER: I -- I agree. But 14 you're also -- that's why you have 25 percent in your 15 reserves that you have to be able to go to sooner or 16 later. Even if you can't use it, you borrow on it to 17 pay off the others so that you use it at the last. 18 There's -- there's a way to use that. That's your 19 savings account. That's for those years that you do 20 have that perfect world, you might say. It may be a 21 flood that hits us so bad. You know, we've seen that in 22 the past. Or a capital murder trial. Or -- or whatever 23 happens. 24 JUDGE KELLY: We've insured against capital 25 murder trial. 59 1 SHERIFF HIERHOLZER: I can remember when we 2 weren't. We had some big ones. But that's -- it takes 3 every one of us to make it work. So you're coming out 4 making it sound like it's a deficit budget and how 5 terrible it is and that we're -- we're not. Because 6 that's the way it has worked and it does work. If it 7 didn't work then you would see that reserve dropping 8 every year. And like Jonathan said -- 9 COMMISSIONER BELEW: That's a good point. 10 SHERIFF HIERHOLZER: -- last time, I was 11 here when it did drop to 12 percent -- 12 COMMISSIONER MOSER: Right. 13 SHERIFF HIERHOLZER: -- because those were 14 the real bad times that the County went through. But 15 the budget has been done the same. And even then, it 16 was able to come back up without large tax increases or 17 anything else because of the way it's been done. 18 COMMISSIONER MOSER: You just add to that 19 two years ago we said -- or last year we said we ought 20 to plan on increasing tax rate one penny per year, per 21 year, per year, per year. Well, this year we didn't 22 have to. 23 SHERIFF HIERHOLZER: We wanted to do it. 24 That's the only way you can do that. 25 COMMISSIONER MOSER: Right. Right. But we 60 1 didn't have to so -- 2 SHERIFF HIERHOLZER: Right. 3 COMMISSIONER MOSER: But decreasing it's not 4 the right thing to do. 5 JUDGE KELLY: But the truth of the matter is 6 we need -- on the rollback tax rate, we couldn't even 7 increase taxes a penny. It was going to be more like 8 three quarters of a cent was the maximum that law would 9 allow without an election. And so the taxpayers have 10 been hit hard enough in my opinion. 11 COMMISSIONER MOSER: Yeah. I agree. 12 COMMISSIONER BELEW: They have been, but 13 there are -- I think they've also not been served well 14 in explanation of why this happened. You take Rusty's 15 department, there are a lot of these unfunded mandates 16 that he deals with day in, day out, 24/7, that cost the 17 taxpayers of this county huge sums of money that would 18 probably completely -- if we didn't have to do them we 19 wouldn't have a deficit. Would you say that, Rusty? 20 I mean, you got easily a million dollars of 21 crap that you have to do, that the State demands that 22 you do, that we have to pay for, that we have to get 23 from the taxpayers of Kerr County. 24 SHERIFF HIERHOLZER: Very true. 25 COMMISSIONER BELEW: And the taxpayers of 61 1 Kerr County need to know why these things happen. I 2 think anybody will take the journey with you if you 3 explain it and they understand what's happening and why. 4 It is not the Sheriff's fault that he has to 5 separate prisoners and do all these other things, watch 6 them every 15 minutes and everything. That all comes 7 down from the State. But it costs money. And it costs 8 the taxpayers of Kerr County money. I wish that instead 9 of them getting upset with local officials, they'd talk 10 to the people in the state legislature. 11 COMMISSIONER MOSER: Senator Buckingham will 12 be here Friday afternoon so there you go. 13 COMMISSIONER BELEW: There you go. And 14 those are the people to talk to. 15 SHERIFF HIERHOLZER: Well, I think you have 16 -- and I think the public needs to know, and I run 17 across this all the time, and Bob was a good one to 18 explain it some, what your County tax dollars pay for. 19 They need to realize that, you know, all your land deeds 20 inside the City of Kerrville or outside the City are 21 done by your County tax dollars. Your birth 22 certificates, your car titles, your tags, all that's 23 done by County taxes. Your criminal investigations. 24 The City may go respond to that murder case, okay, but 25 the autopsy or if they're homeless are paid for by your 62 1 County, not by your City. The trials are paid for by 2 your County, not by the City. The expert witnesses, the 3 juries, all that stuff, you know. The funeral expenses 4 if it's a pauper's funeral are paid for by -- 5 COMMISSIONER BELEW: The translator. 6 SHERIFF HIERHOLZER: -- the County, the 7 translator; not by the City. The City taxes don't pay a 8 dime of that. That's what your County taxes pay for. 9 COMMISSIONER MOSER: Lisa, did you get all 10 that? 11 SHERIFF HIERHOLZER: It's just a major 12 difference. You know, I had a City Councilman tell me 13 one time well, my citizens in the City are double taxed 14 because they're paying both. No. It's two totally 15 separate funding streams for two totally separate things 16 that they pay for. And that's what people have to 17 understand. All your voter stuff, everything, is paid 18 for by the County tax dollars; not City tax dollars. 19 COMMISSIONER MOSER: And probably $500,000 20 of unfunded mandates? 21 SHERIFF HIERHOLZER: Yeah. Easy. 22 JUDGE KELLY: More than that. 23 COMMISSIONER MOSER: It was 300,000 last 24 year. Probably 500 this year. Okay, so are we on 1.6? 25 I've got to go put in playground equipment. 63 1 JUDGE KELLY: I think we've got a motion -- 2 we haven't voted on it, have we? 3 COMMISSIONER MOSER: No, we have not. We 4 hadn't even had the motion yet. 5 MRS. DOWDY: I have a motion from 6 Commissioner Moser. 7 JUDGE KELLY: Okay. We've got a motion to 8 approve the proposed finalized budget. 9 COMMISSIONER MOSER: Well, this is -- this 10 is to authorize publishing a notice of proposed 11 salaries, expenses -- we did that? 12 JUDGE KELLY: We did that. We're on five. 13 MRS. GRINSTEAD: We're on five. 14 COMMISSIONER MOSER: It wasn't 1.6? 15 JUDGE KELLY: We're not to six yet. 16 COMMISSIONER MOSER: Okay. I'm sorry. 17 COMMISSIONER BELEW: So Moser made the 18 motion. I'll second it. 19 JUDGE KELLY: You did second it. 20 COMMISSIONER BELEW: I did second it. 21 JUDGE KELLY: And so this is to authorize 22 the filing of the proposed budget for fiscal year 19-20. 23 COMMISSIONER MOSER: Okay. Good deal. 24 Okay. 25 MRS. GRINSTEAD: I had Harris. 64 1 JUDGE KELLY: Harris? 2 COMMISSIONER BELEW: Oh, you did? 3 JUDGE KELLY: Yeah, he had it. He said it. 4 We're good. 5 COMMISSIONER BELEW: It's been a long time 6 ago. A long time ago. 7 COMMISSIONER HARRIS: A lot of unfunded 8 mandates in between. 9 COMMISSIONER BELEW: I've slept since then 10 too. 11 JUDGE KELLY: Those in favor raise your 12 hand. And abstain. Myself. Vote is three one. Three, 13 zero, one. 14 1.6 on the agenda is consider, discuss and 15 take appropriate action to authorize publishing the 16 notice of proposed salary increases, expenses, and 17 allowances for elected county and precinct officials of 18 Kerr County for the Fiscal Year beginning October 1, 19 2019. 20 MR. ROBLES: I provided a little extra 21 information in item 1.4. 1.6 is what we discussed 22 earlier. We have 26 days as of today to publish the 23 notice of proposed salary increases for officials. That 24 would be September 9th, Monday, at a regular 25 Commissioners' Court we'll set salaries and expenses and 65 1 other allowances. I believe we set that meeting at 2 10:00 a.m. and I will try to get that to the newspaper 3 by the end of this week. 4 COMMISSIONER MOSER: So we did that under 5 1.4? 6 JUDGE KELLY: We don't need any further 7 action, do we? 8 MR. ROBLES: We discussed it under 1.4, but 9 if we want to approve it officially under 1.6 we can. 10 Because 1.4 was just to discuss this page right here, 11 the salaries. 12 COMMISSIONER MOSER: Okay. Move for 13 approval to authorize publishing of notice of proposed 14 salary increases, expenses, and allowances for elected 15 officials and precinct officials of Kerr County for 16 Fiscal Year beginning October 1st, 2019. 17 COMMISSIONER BELEW: Second. 18 JUDGE KELLY: It's been moved by 19 Commissioner Moser, seconded by Commissioner Belew to 20 approve the publishing of the notice of the proposed 21 salary increases, etc. Any further discussion? Those 22 in favor raise your hand. Unanimous, four zero. 23 Do we have -- on the approval agenda, do we 24 have any bills to pay today? 25 MR. ROBLES: No, sir, not today. 66 1 JUDGE KELLY: Okay. Budget amendments? 2 Late bills? 3 MR. ROBLES: No, sir. 4 JUDGE KELLY: No monthly reports? Or do we, 5 Commissioner Harris? 6 COMMISSIONER HARRIS: No. 7 JUDGE KELLY: Okay. And no Auditor Reports? 8 No Court Orders? 9 MRS. DOWDY: I submitted some Court Orders, 10 but Commissioner Letz -- 11 JUDGE KELLY: Okay, So we'll pass on the 12 Court Orders for today. Down to the Information Agenda. 13 Do we have any status reports from department heads? 14 Status reports from elected officials? 15 Status reports from Liaison Commissioners? 16 Is there anything we need to address in 17 Executive Session? If not, then we'll stand adjourned. 18 * * * * * * 19 20 21 22 23 24 25 67 1 STATE OF TEXAS * 2 COUNTY OF KERR * 3 I, DEBRA ELLEN GIFFORD, Certified Shorthand 4 Reporter in and for the State of Texas, and Official 5 Reporter in and for Kerr County, do hereby certify that 6 the above and foregoing pages contain and comprise a 7 true and correct transcription of the proceedings had in 8 the above-entitled Commissioners' Court Approval Agenda. 9 Dated this the 10th day of November, A.D., 10 2019. 11 12 /s/DEBRA ELLEN GIFFORD Certified Shorthand Reporter 13 No. 953 Expiration Date 04/31/2020 14 * * * * * * 15 16 17 18 19 20 21 22 23 24 25