Page 16 - Budget FY 2022-2023 - Update

City of McAllen, Texas Adopted Budget 2023

Living Wage Issue

In addition to the City funding skilled-job training to promote higher paying jobs, it has taken the lead in setting an
example by raising the City minimum wage rate for full-time as well as part-time employees to $12�7535 per hour�

City Retirement Plan (TMRS) Funding
The City’s contribution rate for the City of McAllen for calendar year 2022 and 2023 was 8�13% and 7�82%, respectively
for a blended rate for the fiscal year 2022-23 of 7.90%. The plan is almost fully funded with a funded ratio of 94.8%.
Health Insurance

This year, the City’s cost of providing health insurance is budgeted a decreased from last year’s adjusted budget
level� The total amount budgeted for claims is $8�9M�

Debt Discussion
The City has an outstanding debt balance of $67M in General Obligation and Combination of Tax and Revenue
Certificate of Obligations. Furthermore, the City issued $38M General Obligation Refunding Bonds, Taxable Series
2021 to lower the overall debt service requirements of the City�

The Development Corporation of McAllen, Inc� issued $4,400,000 in Sales Tax Revenue Refunding Bonds, Taxable
Series 2021�Proceeds from the sale of the Bonds were used to refund certain obligations of the Corporation�

In addition, the City has $136M outstanding in Revenue Bonds in the Waterworks and Sewer System� This amount
includes McAllen Public Utility undertaking various water projects including the sludge dewatering at the South Water
Treatment Plant, HCID #1 raw water line, improvements to the South Water Treatment Plant Expansion Filter/Clarifier
and City-wide implementation of an Advanced Metering Infrastructure platform to replace all existing, manually read
water meters� Appropriations include improvements to the electrical system at the North Wastewater Treatment
Plant�

The other Revenue Bonds the City has outstanding are the Airport and Anzalduas bonds which were used for the
Airport Expansion and the construction of the Anzalduas International Crossing Bridge�

Furthermore, the City borrowed $63 million for the Anzaldua’s Land Port of Entry Expansion Project for the construction
of commercial vehicle for the southbound and northbound inspection facilities at the Anzalduas Bridge� This was
financed by the North American Development Bank (NADBank).
A detail listing of the individual bonded indebtedness is provided in pages 206-219�

Impact of Capital Improvement Projects on Operations & Maintenance Expenditures

As a part of the approval process for capital improvement projects, management considered the impact on
operation and maintenance expenditures� Major projects for which funding was provided through the issuance
of bonds generally has a ten-year financial plan prepared in conjunction with the presentation to the credit rating
agencies. The more significant improvements included in the Capital Improvement Fund and the Infrastructure
and Improvement Fund have been evaluated for their impact, as presented on pages 225-226 and page 234� This
year such improvements will have a significant impact in operating and maintenance expenditures in the amount of
$1�3M in the General Fund� Additional projects undertaken by other funding sources will have an additional impact
in operating and maintenance of $1�1M� Refer to pages 251-262 for those projects that will have an impact on
operating and maintenance�

THE FY 2022-23 BUDGET – AS A WHOLE

Overall Budget Basis of Accounting

The budget basis that the City has adopted by past practice is the modified accrual basis for all governmental fund
types. The accrual basis has been adopted for the proprietary fund types, with some modifications; principally the
inclusion of debt principal payments and capital outlay as expenses and not making provision for depreciation
expense� This budget has been prepared in accordance with this legal basis of accounting�

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