2002-2003

ANNUAL BUDGET

CITY OF FRIENDSWOOD, TEXAS

For the Fiscal Year

OCTOBER 1, 2002 - SEPTEMBER 30, 2003

MAYOR

Harold L. Whitaker

COUNCIL Kitten Brizendine Kim Wayne Brizendine Jerry Ericsson Mel P. Measeles Tracy F. Goza Shannon L. Kimmel

BUDGET TEAM

CITY MANAGER Ronald E. Cox

DIRECTOR OF ADMINISTRATIVE SERVICES

Roger C. Roecker

Police Chief Robert B. Wieners Fire Marshal Terry Byrd Community Development and Public Works Director Mike Hodge Community Services Director Jon Branson City Secretary Deloris McKenzie

FINANCE OFFICER

Lynn J. Bucher

ACCOUNTING SUPERVISOR Cindy S. Edge

CITY ORGANIZATION CHART

APPOINTEDBOARDS AND AD

HOCCOMMITTEES

FRIENDSWOODVOLUNTEER

FIREDEPARTMENT

CITY SECRETARY

ADMINISTRATIVESERVICES

POLICEFIRE MARSHAL/

EMERGENCYMANAGEMENT

COMMUNITYDEVELOPMENT

and PUBLICWORKS

COMMUNITYSERVICES

CITY MANAGER

CITY ATTORNEY MUNICIPALJUDGE

CITYPROSECUTOR

MAYOR AND

COUNCIL

INTRODUCTION

2002-2003

1.1

To: Honorable Mayor and Members of City Council From: Ronald E. Cox City Manager Date: September 19, 2002 Subject: 2002-2003 Annual Budget Submitted herewith is the approved budget for the 2002-2003 fiscal year. Attached is a schedule of the changes to the proposed budget submitted to you on August 1, 2002. This final document reflects these changes and is offered for your use during the year. I want to commend you for your contributions throughout this process.

Water &General Sewer Other

Total Fund Fund Funds

Proposed Ending Fund Balance/Working Capital, 9/30/03 141,630 48,965 - 92,665

Proposed Expenditure Increases/(Decreases)

Reduce Health Insurance by 13% from a 30%to 17% increase (85,557) (68,996) (16,561)

Increase Audit Expenditures for Single Audit 6,000 6,000

75,000 75,000 Economic Development Education/Information 5,000 5,000

120,000 120,000 Prospect/Developer Economic Development Seminar 5,000 5,000 Delete Renwick Park Asphalt Parking Lot Paving Project (110,000) (110,000) Break Out CIP Administration -

CD/PW Admin (1,355) (1,355) CD Administration (75) (75) Planning & Zoning (25) (25) Inspection (275) (275) Engineering (600) (50) (550) Street Operations (100) (100) Public Works Administration (500) (500) Water Operations (450) (450) CIP Administration 3,380 1,880 1,500

Correct Negative Vehicle Supply Budgets-Move to Fuel 11,984 12 11,972 From Vehicle Supplies (11,984) (12) (11,972)

Move Supplemental Request for Contract Mowing of ROW (3,000) (3,000) and Ditches from Street Operations to Drainage Operations 3,000 3,000

Move Travel & Training from CD Admin to CD/PW Admin - CD Administration (001-1001-419) (594) (594) CD/PW Administration (001-3001-431) 594 594 - -

Total Expenditure Changes 15,443 32,004 (16,561) -

Total Revised Proposed Ending Fund Balance, 9/30/2003 126,187 16,961 16,561 92,665

Description of Change

SUMMARY OF CHANGES TO PROPOSED BUDGET

Enhancement Plan (Main Street Enhancement Plan)

Section 380 of Local Government Code) Sec 380 Municipal Grants

Economic Development Main Street Land Use

CEDC Economic Development Incentive Grants (Reference

MEMORANDUM To: The Honorable Mayor and Members of City Council From: Ronald E. Cox, City Manager Roger C. Roecker, Director of Administrative Services Subject: 2002-03 Budget Date: July 31, 2002

INTRODUCTION We hereby submit the proposed budget for 2002-03 in accordance with City Charter requirements. The budget is presented in summary fashion, following the established format. The proposed budget document includes the following schedules: a summary of revenues and expenditures; a summary of revenues and expenditures by fund; a schedule of taxable value, tax rate and tax levy for the past ten years; tax and revenue debt service schedules; and a sales tax revenue comparison. This budget development has been consistent with those in recent years. Our goal is to continue to focus on the future and provide quality service to our growing population. The proposed budget emphasizes our infrastructure in the form of streets; parks; water and sewer improvements; our human infrastructure – the City’s employees; and technology. • Street improvements are again being emphasized in this year’s budget. We have

allocated $800,000 for street and sidewalk improvements. This may be the largest amount the City has ever budgeted from current revenues and represents a major commitment to continue the “pay-a-you-go” street improvement program.

• Parks are also a major component of this budget. Several of the City parks are receiving improvements in this proposal.

o Renwick Park improvements include: § Lighting for fields 1 & 3 - $110,500. § Replacing the asphalt parking lot - $110,000

o Leavesley Park is receiving several smaller improvements. § Awnings for the two building entrances - $8,400. § 100 new chairs & 30 new tables - $8,000. § New playground equipment - $14,000. § Fence replacement - $2,925.

o We propose several improvements to Stevenson Park, as noted below. § Rebuild the jogging trail - $25,000.

§ Replace broken and/or worn parts to the Compan Castle playground equipment - $8,000.

§ Add 15 new electrical outlets to the park - $7,800. o New playground equipment is proposed at Old City Park - $14,000. o Tennis court lighting at Friendswood High School - $75,000. The City and

school district plan to enter into a joint-use agreement for the use of the FISD tennis courts. The City will provide funding to light the courts. FISD will maintain the lighting and pay all utility bills.

o The second year’s payment for the Sports Park property is budgeted at $607,153. This payment will be made from the tax-debt portion of the city’s tax rate.

The total proposed funding for these parks and recreation projects is $990,778. • We believe Personnel are the most important part of the City’s infrastructure. A

recent Dallas Morning News article discussed a staffing survey done by the City of Rowlett. The article says, “The city surveyed Texas cities of roughly similar population – 29,000 to 60,000 – and found that Rowlett ranked last at 5.99 full-time employees per 1,000 residents.” It further states, “The average in the city’s study was nearly nine employees per 1,000 residents.” Our City government has always been proud of its low employee ratio of 5.0 full-time employees per 1,000 residents, which is less than Rowlett’s figure by almost one employee per 1,000! Adjusting this figure for the new employees requested in the proposed budget results in a per 1,000 ratio of 5.16, still .83 less than the Rowlett number. I believe this is an indicator of the production and efficiency of our City staff, but we must remain cognizant of the increasing demands a growing community places on our staff. Council has supported a pay plan that properly compensates the employees and has typically provided annual merit funding. $129,493 has been included in this budget.

o Five full-time employees are proposed in this budget: four new positions and the conversion of two part-time positions to one full-time position. The amounts below include salaries, benefits and any additional equipment required for the new employee. § Clerk III in Municipal Court - $38,995. § Street Maintenance Operations Coordinator in Public Works -

$56,119. § DARE Officer - $71,973. § Community Services Peace Officer - $73,011. § Communications Operator I – Convert two part-time positions to one

full-time - $17,533.

The new positions are explained more fully in each department’s narrative. In addition, several other personnel changes are proposed.

§ Municipal Court - $10,887. This amount comes from proposed adjustments to the prosecutors and judges salaries; budgeting for additional magistrate services; and the cost of two prosecutors to assist in court one night each month.

§ Fire Marshal/FVFD – Increase the part-time administrative clerk’s hours from 832 to 998 - $1,733.

§ Police – Upgrade three Lead Patrol Officer positions to Corporal - $17,533.

o Health insurance continues to be a tremendous challenge for businesses of all types and sizes. Governing Magazine’s June 2002 issue says, “According to estimates by health care providers, premiums will rise by 12 to 15 percent this year. For many governments, especially small ones, the rise could run to 25 percent or more.” And the July 26, 2002 Kiplinger Letter states, “No relief on health care: Insurers will raise rates aggressively to cover big increases in costs of hospital care and prescription drugs. For big firms, 18%. Smalls, 25%.” We have changed insurance providers two years in a row to address service issues and financial concerns. Last year, we requested proposals from ten companies and received interest from just two private carriers. Their rates were virtually identical. The Texas Municipal League – Group Benefits Risk Pool is always an option, but has historically been much more expensive. As a result, we are recommending that we stay with our current provider, Aetna, despite expecting a large increase. We have budgeted an additional 30% increase in cost with the employees continuing to pick up their proportionate amount of the increase. This amounts to $159,829 in the General Fund and $44,798 in the Water & Sewer Funds. However, we have not received a firm renewal amount at this time, so we believe this to be a worst-case scenario. In addition, our Administrative Services staff is meeting with our agents and the Aetna representatives to review plan changes that will help reduce this large increase. These discussions will not take place in time to be reflected in this proposal, but we will report our findings to you during the upcoming budget discussions.

• Council has been very supportive of the City’s efforts to provide up-to-date

Technology for the staff. Tools such as this have allowed us to be staffed very efficiently as shown above. A complete “technology refresh” was approved by Council in fiscal year 2001-02. This will allow us to replace our hardware (PC’s, server, tape drive and printers) and upgrade our operating system and client access software. The new PC’s will have processor rates at 1.6 GHz and our PC operating systems will be upgraded to Windows XP. We will be financing this over a three-year period at a cost of $77,605 in 2002-03.

• Vehicles are another important tool that allows City staff to perform efficiently. Since establishing the Vehicle Replacement Plan in 1999 the City’s fleet has been vastly improved. Many old vehicles have been replaced, some with mileage far exceeding 200,000 miles. We are now entering the second year of our Vehicle Replacement Fund (VRF). This fund allows us to “finance” our vehicle purchases internally. The VRF purchases all City vehicles costing less than $50,000 and “leases” them to the City departments. These “lease” payments allow the VRF to purchase replacements for the departments’ vehicles according to the Vehicle Replacement Plan schedule. Council asked that staff review the criteria that have been used to determine when vehicles should be replaced. We have done this and will report our findings to you at a workshop meeting. The current plan calls for the following vehicles to be replaced in 2002-03: five patrol units at a cost of $28,613 each and a one-ton crew truck in Public Works – Water and Sewer department for $30,500. In addition, the Street Division of Public Works is requesting that we upgrade the replacement of a 1992 Ford F150 with a one-ton crew truck at an additional cost of $16,985. A Police Department administrative vehicle for the Deputy Chief is proposed at $20,000 and a one-ton bucket truck estimated at $40,000 is included. The total of these replacements and additions is $250,550. We are appreciative of Council for allowing us to create this method to fund our future City vehicles and believe it will prove to be beneficial in several ways.

o The City fleet will be refreshed as needed to provide proper employee resources.

o It will allow the City to “finance” its fleet purchases internally, thus saving the cost of borrowing externally.

o It will ensure adequate funding is available for fleet replacement. o The annual budgetary impact will be leveled out. A more consistent funding

requirement will be established, eliminating the extreme highs and lows from one budget to the next.

EXPENDITURES Operating Budgets. We began the budgeting process by using the 2001-02 departmental operating budgets. One-time expenditures that do not require funding in 2002-03 were deducted to arrive at our new base budget. Based on the Department of Labor’s statistics we added 1.6% to our base operating budgets to offset inflationary growth, as measured by the Consumer Price Index. This process remains consistent with procedures approved by Council for development of the operating budget. Several departments’ budgets were increased due to extraordinary circumstances. Several of the larger extraordinary increases are shown below.

§ Impact Fee Study Update $30,000 § Clear Creek Rainfall Animation Project $32,000 § Galveston Central Appraisal District –

budget increase $ 9,813 § FVFD Pension Fund Increase $12,672 § 1st of FVFD 3-Year SCBA

Cylinder Replacements $10,800 § Centennial Park Electricity for new lights $14,000 § Economic Development Marketing Increase $20,000 § Phase II Storm Water Plan $20,000

Total $149,285 Capital Equipment, Major Repairs & Equipment. The following items are included in the budget, in addition to the items previously discussed in this document. General Fund: Replace 1980 GMC Dump Truck Used in the Public Works Streets and Water/Sewer Divisions* $36,000 Renovation of Municipal Court Office $37,562 Repave Activity Building Parking Lot $28,000 Clear Creek Desnagging Project – GCCDD $50,000 Animal Cage System for 3rd Truck $ 5,000 Camera System for Jail $ 7,500 Hostage Negotiator Rescue Phone $ 5,000 Add 1 Siren to Emergency Early Warning System $16,000 Total $185,062 Water & Sewer Fund: Replace 1980 GMC Dump Truck Used in the Public Works Streets and Water/Sewer Divisions* $36,000 Hydraulic Jack Hammer for Backhoe $10,000 San Joaquin Estates Sewer Line Replacement $715,384 Southeast Water Treatment Plant – Additional Debt Service Due to Increased Capacity $30,343 Sanitary Sewer System Cleaning & Rehab Pgm. $125,000 Total $916,727

REVENUES The entire area surrounding Friendswood is experiencing unprecedented growth. Our population continues to grow at a strong pace and will continue to place increasing demands on our revenue stream, especially in the General Fund.

General Fund To no one’s surprise the City’s largest single source of revenue in the General Fund continues to be ad valorem taxes. The revenues included in this budget are calculated based on maintaining the 2001-02 tax rate of $.6385 for the 4th consecutive year. This rate consists of a maintenance and operations (M&O) tax rate of $.5547 and an I&S (debt service) tax rate of $.0838. The Central Appraisal District has certified the 2002 taxable value as $1,499,081,210, with an additional $20,000,000 uncertified and under protest. We are hopeful that we will lose no more than $4,000,000 of the value under protest and have estimated a total taxable value of $1,516,000,000. This is an increase of $131,000,000 in taxable value with $110,390,199 (84%) of this increase resulting from new construction in the City. This additional value results in an M&O levy increase of $726,657. The second largest source of revenue in the General Fund is Sales Tax. We are projecting an 11.12% increase in this revenue stream, from the current budget of $2,205,000 to $2,450,000. This is an increase of $245,000 over last year’s budget, but is 5% less than our projected sales tax revenue for the current fiscal year. We try to budget this revenue stream conservatively, as sales taxes can fluctuate from year-to-year. We have projected an increase of 4.08% in Franchise Fee and Right-of-Way Access revenue (TNMP, Reliant, SWB, ENTEX, & Time-Warner), from $949,000 to $988,000. Revenue from Building Licenses and Permits is predominately based on 370 residential building permits. This total is $514,392, which is a decrease of $77,672. The number of homes we are using for our projection is identical to last year; however, we are seeing the average cost decline from $225,000 to $215,000 this year. This affects the cost of all building permits. The second reason for this decrease is a reduction in Plan Inspection Fees. We budgeted last year’s revenue using a large percentage of custom homes. We have seen this not to be the case and have based our revenue projection on a greater number of tract homes. This means there are fewer plans to inspect, thus less revenue. Municipal Court fines and fees are another major source of general fund revenue. We are now averaging 725 citations per month. As a result, we are projecting court revenues of $503,190, a $104,190 increase over 2001-02. Interest income is the last large general fund revenue source. As we are all aware, interest rates are the lowest we have seen in many years. This has allowed us to issue bonds at lower rates, but also results in reduced interest revenue. We have projected a reduction of $150,025 in interest income for the 2002-03 year. Water and Sewer Fund We are projecting our water and sewer revenues based on a year with average rainfall, and hope we receive our average throughout the year, and not through one of our tropical events! In addition to an expected increase in water consumption, we are also projecting

revenue growth based on our change to a flat water rate on January 1, 2002. The new rate was in effect for 9 months of the 2001-02 fiscal year, but will be in place for the entire 2002-03 budget. We are budgeting water revenues of $4,241,000, an increase of $101,653 or 2.46%, due to the combination of our steady growth and the water rate change. Sewer revenue is based on our customers’ water consumption during the winter months of November through February. We are projecting sewer revenues to grow by $304,770 for a total of $2,400,000.

FUND BALANCE We have made remarkable progress in developing much healthier financial reserves. Our fund balance projections are very positive due to a policy enacted by Council several years ago. This policy change allocates to fund balance any excess revenue or savings from budgeted expenditures that are not spent by year-end and it has been very successful. Once again, the Water and Sewer and General Funds are each budgeted to operate independently, within their own financial means. General Fund reserves are projected to reach $3.0 million by year-end. This projection would be much higher, but for the financial effect of Tropical Storm Allison and the City’s participation in the FEMA Hazard Mitigation Program. 136 homes that had repetitive flood losses or were substantially damaged by TS Allison’s floodwaters were purchased and demolished. The City’s portion of this $25.7 million project is estimated to be $2.3 million. Had Council not had the fore thought and discipline to set a plan in place to develop adequate reserves, we would not have been prepared for financial demands placed on us by this natural disaster. Water and Sewer Fund reserves are estimated to be $3.3 million at year-end. Just as the General Fund reserves enabled us to deal with the financial impact of TS Allison, our Water and Sewer Fund reserve will enable the City to pay its share of the improvements being undertaken at the Blackhawk Regional Wastewater Treatment Plant. The plant operator offered to finance the City’s portion, but having established substantial reserves will allow us finance the $858,754.34 internally.

CONCLUSION We are always appreciative of the way our staff and Council work together. This budget process is just another example of the way this group is able to function as a team, and cooperatively produce a financial plan for the upcoming year. We also want to publicly recognize the efforts of the Administrative Services Department. Many extra hours are spent converting the numbers into an understandable document. We are ready to discuss the budget with you and look forward to its adoption.

FISCAL YEAR 2003 BUDGET FACT SHEET

Operating Budget $20,507,587 Capital Budget $2,386,711 Net Assessed Property Valuation $1,516,000,000 Tax Rate per $100 Valuation $.6385 Population 33,500 Number of Utility Customers Water 10,330 Sewer 9,658 Square Miles 22.7

STAFFING 01-02 02-03 Full- time employees 163.00 168.00 Part-time employees (FTE) 20.79 20.27 Total employees (FTE) 183.79 188.27

UTILITY RATES - (Billed Bimonthly) WATER RATES: single-family, single-business, or construction in progress: First 3,000 gallons per month $12.00 Above 3,000 gallons, per 1,000 gallons $ 2.61 Trailers, apartments, condominiums, multi-family, multi-business, or commercial units, including, but not limited to, strip centers, professional office buildings and shopping centers: First 3,000 gallons per month $ 7.50 Above 3,000 gallons, per 1,000 gallons $ 2.61 Lawn and landscape sprinkler irrigation systems, where water passing through the meter is used for no other purpose: First 3,000 gallons per month $ 6.25 Above 3,000 gallons, per 1,000 gallons $ 2.61 SEWER RATES: Single-family residential based on the winter average consumption of water: First 3,000 gallons per month: $10.00 Over 3,000 gallons per month: $ 1.90 per thousand SANITATION: $10.09 per month, includes curbside recycling fee.

ORDINANCE NO. 2002-18

AN ORDINANCE APPROVING AND ADOPTING THE CITY OF FRIENDSWOOD, TEXAS, GENERAL BUDGET FOR THE FISCAL YEAR 2002/2003; MAKING APPROPRIATIONS FOR THE CITY FOR SUCH FISCAL YEAR AS REFLECTED IN SAID BUDGET, AND MAKING CERTAIN FINDINGS AND CONTAINING CERTAIN PROVISIONS RELATING TO THE SUBJECT.

* * * * * * * * * * *

WHEREAS, on August 1, 2002, the City Manager presented to the City Council a proposed Budget of the expenditures of the City of Friendswood for the fiscal year 2002/2003, a SUMMARY copy of which is attached hereto and made a part hereof; and

WHEREAS, pursuant to notice as required by law, public hearing on such Budget was held in

the Council Chambers in the City Hall, at which hearings all citizens and taxpayers of the City had the right to be present and to be heard and those who requested to be heard were heard; and

WHEREAS, the City Council has considered the proposed budget and has made such changes

therein as in the City Council’s judgment were warranted by law and were in the best interests of the citizens and taxpayers of the City; and

WHEREAS, a copy of the Budget has been filed with the City Secretary and the City Council

desires to adopt the same; and WHEREAS, in accordance with Section 8.03 (A) of the City Charter, the City Council has

reviewed estimates of revenue to be derived by the City during the 2002/2003 fiscal year, including the most up-to-date preliminary tax evaluation figures as have been made available to the City by the Galveston County Appraisal District, the City Council finds and determines that as of the date of this Ordinance, and in order to meet the requirements as set out in Section 8.03 (E) of the City Charter, the proposed Budget referred to here-in is based on the best information available to the City to assure that budgeted expenditures do not exceed total estimated income; now, therefore. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD, STATE OF TEXAS: Section 1. The facts and recitations set forth in the preamble of this Ordinance are hereby found to be true and correct. Section 2. In accordance with the provisions of Article 689a – 15, V.T.C.S., the City Council hereby approves and adopts the Budget described above, the same being on file with the City Secretary. The City Secretary is hereby directed to place on said budget and to sign an endorsement reading as follows: “The Original General Budget of the City of Friendswood, Texas, for the fiscal year 2002/2003 and to keep such Budget on file in the City Secretary’s Office as a public record.

Section 3. In support of said Budget and by virtue of the adoption thereof, there are hereby appropriated out of available cash funds and out of the general and special revenues of the City which will be received in the treasury during the fiscal year 2002/2003 the amount set forth in said approved Budget for the various purposes stated therein. The total amount now thus appropriated and the funds from which the same are derived are as follows;

Beginning Fund Balance , 10/01/2002 $ 175, 082

Total Revenues $22, 868, 603 Total Resources Available for Appropriation $23, 043, 685 Total Expenditures and Other Financing Uses $22, 917, 498 Ending Fund Balance, 9/30/2003 $ 126, 187 SUMMARY OF 2002/2003 PROPOSED BUDGET IS ATTACHED HERETO AND MADE A PART OF AS “EXHIBIT A”. PASSED, APPROVED, AND ADOPTED on first and final reading this 16th day of September, 2002.

___________________________ Mayor Harold L. Whitaker City of Friendswood ATTEST: _____________________________ Deloris McKenzie, TRMC City Secretary

EXHIBIT A

02-03 PROPOSED

BUDGETREVENUES

Taxes 13,123,660 Charges for Services 7,343,855 Permits and Licenses 519,792 Fines 568,104 Intergovernmental Revenues 322,813 Interest 246,275 Vehicle Replacement Fund Rembursements 263,654 Miscellaneous Receipts 480,450

TOTAL REVENUES 22,868,603

EXPENDITURESGeneral Government 3,386,025 Public Safety 5,663,533 Community Development and Public Works 6,187,404 Community Services 2,544,336 Vehicle Replacement Fund 187,080 Capital Improvements 1,857,646 Debt Service 3,068,274

TOTAL EXPENDITURES 22,894,298

RESERVES 23,200

TOTAL EXPENDITURESAND RESERVES 22,917,498

REVENUES OVER (UNDER)EXPENDITURES AND RESERVES (48,895)

BEGINNING FUND BALANCE 175,082

ENDING FUND BALANCE * 126,187

* Includes $72,559 in restricted cash

BUDGET SUMMARY

ORDINANCE NO. 2002-17

AN ORDINANCE PROVIDING FOR THE ASSESSMENT, LEVY, AND COLLECTION OF AD VALOREM TAXES OF THE CITY OF FRIENDSWOOD, TEXAS, FOR THE YEAR 2002 AND FOR EACH YEAR THEREAFTER UNTIL OTHERWISE PROVIDED; PROVIDING THE DATE ON WHICH SUCH TAXES SHALL BE DUE AND PAYABLE; PROVIDING FOR PENALTY AND INTEREST ON ALL TAXES NOT TIMELY PAID; AND REPEALING ALL ORDINANCES AND PARTS OF ORDINANCES IN CONFLICT HEREWITH.

* * * * * * * * * * *

WHEREAS, Section 26.05 of the Texas Property Tax Code provides that by September 1 or as soon thereafter practicable, the governing body of each taxing unit shall adopt a tax rate for the current tax year; and

WHEREAS, such Section further provides that where the tax rate consists of two components

(one which will impose the amount of taxes needed to pay the unit’s debt service and the other which will impose the amount of taxes needed to fund maintenance and operation expenditures of the unit for the next year) each of such two components must be approved separately; and

WHEREAS, the proposed tax rate for the current tax year of the City of Friendswood, Texas,

consists of two such components, a tax rate of $.0838 for debt service and a tax rate of $.5547 to fund maintenance and operation expenditures; and

WHEREAS, by separate motions heretofore adopted by the City Council of the City of

Friendswood, Texas, at a regular meeting of City Council held on this 16th day of September, 2002, said City Council has approved separately the tax rate heretofore specified for each of said components; and

WHEREAS, having thus separately approved the tax rate for each of such components, it is

necessary and appropriate for the City Council to now formally pass, approve, and adopt a 2002 Tax Rate Ordinance of the City of Friendswood, Texas; now, therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD, STATE OF TEXAS: Section 1. The facts and recitations set forth in the preamble of this Ordinance are found to be true and correct and are hereby adopted, ratified, and confirmed. Section 2. All property subject to ad valorem taxation by the City of Friendswood, Texas, shall be equally and uniformly assessed for such purposes at One Hundred Percent (100%) of the fair market value of such property.

Section 3. There is hereby levied for general purposes and use by the City of Friendswood, Texas, for the year 2002 and for each year thereafter until otherwise provided, an ad valorem tax at the rate of $.5547 on each One Hundred Dollars ($100) of assessed valuation on all property, real, personal

and mixed, within the corporate limits upon which an ad valorem tax is authorized by law to be levied by the City of Friendswood, Texas. The proceeds from such tax shall be applied to the payment of the general and current expenses of the government of the City. All such taxes shall be assessed and collected in current money of the United States of America. Section 4. For the purpose of paying the interest on bonds, warrants, certificates of obligation, or other lawfully authorized evidence of indebtedness issued by the City of Friendswood, Texas, including the various installments of principal due on the serial bonds, warrants, certificates of obligation, or other lawfully authorized evidence of indebtedness issued by the City as such installments shall respectively mature, and for the purpose of repaying any sums borrowed in anticipation of current revenues for use in the payment of bonds and certificates of obligation and interest thereon maturing in the fiscal year 2002/2003 and for the purpose of paying interest and making provisions for the sinking fund on such other bond issues, warrants, certificates of obligation, or other lawfully authorized evidence of indebtedness as may be authorized, there is hereby levied for the year 2002 and for each year thereafter until otherwise provided, to be assessed and collected upon all property described in Section 3 of this Ordinance, an annual ad valorem tax at the rate of $.0838 on each One Hundred Dollars ($100) of assessed valuation. Section 5. All ad valorem taxes levied hereby, in the total amount of $.6385 on each One Hundred Dollars ($100) of assessed valuation, as reflected by Sections 3 and 4 hereof, shall be due and payable on or before January 31, 2003. All ad valorem taxes due the City of Friendswood, Texas, and not paid on or before January 31st following the year for which they were levied shall bear penalty and interest as prescribed in the Property Tax Code of the State of Texas. Section 6. All ordinances and parts of ordinance in conflict herewith are, to the extent of such conflict, hereby repealed. PASSED, APPROVED, AND ADOPTED on first and final reading this 16th day of September 2002.

_________________________ Mayor Harold L. Whitaker City of Friendswood Attest: ___________________________ Deloris McKenzie, TRMC City Secretary

SUMMARY SCHEDULES

BUDGETED REVENUES

Miscellaneous Receipts2.10%

Vehicle Replacement Fund Reimbursements

1.15%

Permits and Licenses

2.27%Property Taxes

42.33%

Franchise Tax4.32%

Sales Tax10.74%

Interest1.08%

Fines2.48%

Charges for Services32.11%

Intergovernmental Revenues

1.41%

BUDGETED EXPENDITURES

Capital Improvements

8.11%

Debt Service13.40%

Community Services11.11%

Public Safety24.90%

General Government

14.79%

Community Development and

Public Works27.03%

Vehicle Replacement Fund

0.82%

00-01ACTUAL

01-02AMENDED BUDGET

* 01-02

YTD ACTUAL 6/30/02

01-02FORECAST

02-03BUDGET

REVENUESTaxes 11,357,063 11,997,525 11,562,797 11,997,525 13,123,660 Charges for Services 6,516,644 7,030,445 4,815,144 7,030,445 7,343,855 Permits and Licenses 1,038,242 596,464 620,142 596,464 519,792 Fines 548,933 582,946 474,083 582,946 568,104 Intergovernmental Revenues 580,557 979,657 15,323,812 17,052,635 322,813 Alternate Funding Proceeds 6,117,175 - 43,170 - - Interest 976,229 437,953 312,981 437,953 246,275 VRF Reimbursements - 156,101 156,101 156,101 263,654 Miscellaneous Receipts 760,202 520,574 528,353 520,574 480,450

TOTAL REVENUES 27,895,045 22,301,665 33,836,583 38,374,643 22,868,603

EXPENDITURESGeneral Government 2,362,575 3,315,110 2,128,819 3,315,110 3,386,025 Public Safety 5,337,016 5,566,066 3,901,754 5,566,066 5,663,533 Community Development

and Public Works 4,814,732 6,057,812 21,906,124 25,314,339 6,187,404 Community Services 2,263,135 2,505,864 1,708,445 2,505,864 2,544,336 Vehicle Replacement Fund - 276,289 232,157 276,289 187,080 Capital Improvements 5,665,407 4,512,539 4,247,452 4,512,539 1,857,646 Debt Service 2,565,952 2,932,420 1,901,939 2,932,420 3,068,274

TOTAL EXPENDITURES 23,008,817 25,166,100 36,026,690 44,422,627 22,894,298

RESERVES 18,209 23,200 5,842 23,200 23,200

TOTAL EXPENDITURESAND RESERVES 23,027,026 25,189,300 36,032,532 44,445,827 22,917,498

REVENUES OVER (UNDER)EXPENDITURES AND RESERVES (48,895)

BEGINNING FUND BALANCE 175,082

ENDING FUND BALANCE ** 126,187

BUDGET SUMMARY

*Tropical Storm Allison Hazard Mitigation revenues and expenditures are included in the 2002 YTD Actual column, but are not in the 2002 Amended Budget column.

** Includes $72,559 in restricted cash.

99-01ACTUAL

01-02AMENDED BUDGET

01-02YTD ACTUAL

6/30/0201-02

FORECAST02-03

BUDGET

REVENUES

General Fund 13,232,309 13,592,736 12,081,279 13,592,736 13,657,586 Police Investigation Fund 4,710 - 147 - - Fire/EMS Donation Fund 266,701 190,000 169,923 190,000 200,000 Park Land Dedication Fund 103,810 41,900 73,337 41,900 - Hazard Mitigation Fund - - 15,150,793 16,072,978 - Tax Debt Service Fund 1,075,761 1,160,630 1,189,980 1,160,630 1,270,408 Vehicle Replacement Fund - 156,101 168,135 156,101 263,654 Water and Sewer Fund 6,064,818 6,523,627 4,268,300 6,523,627 6,908,850 1999 Water and Sewer Bond Construction Fund 159,995 - 29,857 - - 2000 Water and Sewer Bond Construction Fund 134,268 - 3,393 - - 2001 Water and Sewer Bond Construction Fund 6,178,030 1,903 80,913 1,903 - Water and Sewer CIP/Impact Fee Funds 649,697 634,768 595,170 634,768 557,805 Water and Sewer Revenue Debt Service Fund 23,629 - 24,982 - 10,300 1776 Park Trust Fund 1,317 - 374 - -

TOTAL REVENUES 27,895,045 22,301,665 33,836,583 38,374,643 22,868,603

EXPENDITURES

General Fund 11,839,601 16,030,469 27,750,423 35,286,996 14,304,678 Police Investigation Fund 3,059 - 1,197 - - Fire/EMS Donation Fund 180,970 287,572 191,480 287,572 205,572 Tax Debt Service Fund 1,067,208 1,164,820 590,026 1,164,820 1,280,464 Vehicle Replacement Fund - 276,289 232,157 276,289 187,080 Water and Sewer Operation Fund 3,604,617 4,974,171 2,902,310 4,974,171 5,128,694 1999 Water and Sewer Revenue Bond Construction Fund 2,037,924 170,478 1,090,562 170,478 - 2000 Water and Sewer Revenue Bond Construction Fund 2,614,619 - - - - 2001 Water and Sewer Revenue Bond Construction Fund 162,075 494,701 1,956,622 494,701 - Water and Sewer RevenueDebt Service Funds 1,498,744 1,767,600 1,311,913 1,767,600 1,787,810

TOTAL EXPENDITURES 23,008,817 25,166,100 36,026,690 44,422,627 22,894,298

Totals exclude fund balance, reserves and interfund transfers.

REVENUES AND EXPENDITURES BY FUND

00-01ACTUAL

01-02AMENDED BUDGET

01-02YTD ACTUAL+

ENCUMB 6/30/02

01-02FORECAST

02-03BUDGET

Personnel 8,117,911 9,104,240 6,298,707 9,104,240 9,904,733 Supplies 825,398 1,016,713 780,218 1,016,713 911,897 Maintenance 689,225 1,253,147 654,885 1,253,147 951,314 Services and Other Charges 4,372,647 5,329,911 3,040,640 5,343,511 5,524,264 Capital Equipment & Improvements 6,336,114 5,352,907 23,245,488 24,595,834 2,386,711 Debt Service 2,667,522 3,109,182 2,006,752 3,109,182 3,215,379 Reserves 18,209 23,200 5,842 23,200 23,200

Total 23,027,026 25,189,300 36,032,532 44,445,827 22,917,498

EXPENDITURES BY OBJECT

Services and Other Charges24.11%

Reserves0.10%

Debt Service14.03% Personnel

43.22%

Maintenance4.15%

Supplies3.98%

Capital Equipment & Improvements

10.41%

Net Assessed Value, estimated as of July 25, 2002 $1,516,000,000

Divided by 100 100

Rate Base $15,160,000

Tax Rate 0.6385

Estimated Total Tax Levy $9,679,660

Estimated Collection Rate 100%

Estimated Tax Collections, 1999-2000 $9,679,660

PercentTotal Increase

Fiscal Taxable OverYear Tax Assessed Homestead Tax Total Prior

Ending Year Value Exemption Rate Tax Levy Year

1993-94 1993 $825,111,643 20% $0.6630 $5,450,155

1994-95 1994 $869,085,848 20% $0.6630 $5,762,039 5.7%

1995-96 1995 $911,351,022 20% $0.6156 $5,610,277 -2.6%

1996-97 1996 $941,679,232 20% $0.6045 $5,692,451 1.5%

1997-98 1997 $987,445,395 20% $0.5961 $5,886,162 3.4%

1998-99 1998 $1,027,271,860 20% $0.6125 $6,292,040 6.9%

1999-00 1999 $1,133,824,245 20% $0.6385 $7,239,468 15.1%

2000-01 2000 $1,238,337,688 20% $0.6385 $7,941,238 9.7%

2001-02 2001 $1,387,074,550 20% $0.6385 $8,856,471 11.5%

2002-03 2002 $1,516,000,000 20% $0.6385 $9,679,660 9.3%

TAXABLE VALUE AND LEVY COMPARISON

ESTIMATED AD VALOREM TAX COLLECTIONS - CURRENT ROLL

2002-03Month of 1997-98 1998-99 1999-00 2000-01 2001-02 ProposedReceipt Actual Actual Actual Actual Actual Budget

October 131,001 124,640 132,106 159,067 191,782 185,211

November 196,312 223,344 203,187 248,466 286,363 276,552

December 127,114 124,649 171,796 158,743 195,710 189,005

January 114,078 117,701 134,693 156,796 171,470 165,595

February 226,463 228,138 216,235 276,711 328,396 317,145

March 122,030 128,527 180,069 165,028 155,366 150,043

April 100,189 119,398 114,378 183,881 186,104 179,728

May 165,372 187,733 210,103 240,918 300,771 290,466

June 128,561 135,804 135,699 167,192 136,576 130,665

July 125,154 97,585 169,626 147,471 178,242 142,418

August 214,159 220,564 209,746 255,026 240,335 246,289

September 151,322 140,799 165,886 183,157 180,339 176,883 - - - - - - Total 1,801,755 1,848,882 2,043,524 2,342,456 2,551,454 2,450,000

SALES TAX REVENUE COMPARISION

1997-1998 through 2002-2003

FiscalYear Tax Year

GeneralFund

DebtService Fund

TotalTax Rate

1993-94 1993 0.50250 0.16050 0.663001994-95 1994 0.51400 0.14900 0.663001995-96 1995 0.46800 0.14760 0.615601996-97 1996 0.49610 0.10840 0.604501997-98 1997 0.52760 0.06850 0.596101998-99 1998 0.56100 0.05150 0.612501999-00 1999 0.55420 0.08430 0.638502000-01 2000 0.55470 0.08380 0.638502001-02 2001 0.55470 0.08380 0.638502002-03 2002 0.55470 0.08380 0.63850

Tax Rate Comparison

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

GeneralFund

DebtService Fund

Fiscal Tax Galveston Harris Year Year City FISD CCISD County County CCDD

92-93 1992 $0.6630 $1.720 $1.42560 $0.4650 $0.60032 $0.145093-94 1993 $0.6630 $1.618 $1.46000 $0.4650 $0.60044 $0.145094-95 1994 $0.6630 $1.609 $1.47000 $0.4850 $0.62665 $0.143095-96 1995 $0.6156 $1.590 $1.47000 $0.5200 $0.62462 $0.141096-97 1996 $0.6045 $1.590 $1.51500 $0.5200 $0.64173 $0.143097-98 1997 $0.5961 $1.575 $1.59000 $0.5200 $0.64173 $0.142598-99 1998 $0.6125 $1.672 $1.64150 $0.5200 $0.64173 $0.150099-00 1999 $0.6385 $1.535 $1.59856 $0.5450 $0.64173 $0.150000-01 2000 $0.6385 $1.585 $1.70084 $0.5326 $0.64173 $0.155001-02 2001 $0.6385 $1.617 $1.72500 $0.5654 $0.63998 $0.155002-03 2002 $0.6385 $1.637 $1.74000 $0.6063 $0.63998 $0.1550

*2002 Proposed

2002 Tax Rate ComparisonLocal Governments

$0.0000$0.2000$0.4000$0.6000$0.8000$1.0000

$1.2000$1.4000$1.6000$1.8000$2.0000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

City FISD CCISD Galveston CountyHarris County CCDD

2002 Tax Rate Comparison

Galveston County

Galveston County

20%

Clear Creek Drainage District

5%

City of Friendswood

21%

Friendswood ISD54%

Harris County

Clear Creek ISD58%Harris County

21%

City of Friendswood

21%

COMPARISON OFPOPULATION, EXPENDITURES, TAX RATE

AND WATER CUSTOMERS

Total Population

20

22

24

26

28

30

32

34

36

90-91 92-93 94-95 96-97 98-99 00-01 02-03

Th

ou

san

ds

Po

pu

lati

on

Total Expenditures

8

10

12

14

16

18

20

22

24

90-91 92-93 94-95 96-97 98-99 00-01 02-03

Mill

ions

Exp

end

itu

res

Tax Rate

0.5800

0.6000

0.6200

0.6400

0.6600

0.6800

0.7000

0.7200

90-91 92-93 94-95 96-97 98-99 00-01 02-03

Tax

Rat

e

Total Water Customers

6

7

8

9

10

11

12

90-91 92-93 94-95 96-97 98-99 00-01 02-03

Tho

usan

ds

Nu

mb

er o

f C

ust

om

ers

FYE PRINCIPAL INTEREST TOTAL

2003 268,446 105,753 374,199 2004 283,464 93,497 376,961 2005 331,800 46,369 378,169 2006 333,900 33,222 367,122 2007 336,000 19,991 355,991 2008 338,100 6,677 344,777

Total 1,891,710 305,509 2,197,219

Tax Debt Service to Maturity

0.0

0.1

0.1

0.2

0.2

0.3

0.3

0.4

0.4

2003 2004 2005 2006 2007 2008

Mill

ions

PRINCIPAL INTEREST

FYE PRINCIPAL INTEREST TOTAL

2003 706,547 1,064,820 1,771,367 2004 738,380 1,029,059 1,767,439 2005 753,200 963,270 1,716,470 2006 801,100 924,564 1,725,664 2007 854,000 884,503 1,738,503 2008 901,900 841,544 1,743,444 2009 975,000 791,548 1,766,548 2010 1,030,000 734,954 1,764,954 2011 1,050,000 672,003 1,722,003 2012 1,095,000 609,962 1,704,962 2013 1,170,000 551,940 1,721,940 2014 1,235,000 489,585 1,724,585 2015 1,305,000 423,148 1,728,148 2016 1,390,000 352,428 1,742,428 2017 1,465,000 277,331 1,742,331 2018 1,550,000 197,045 1,747,045 2019 1,640,000 111,275 1,751,275 2020 650,000 50,930 700,930 2021 680,000 17,340 697,340

Total 19,990,127 10,987,249 30,977,376

Revenue Debt Service to Maturity

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mill

ions

PRINCIPAL INTEREST

Community Development and Public WorksStreet and Sidewalk Improvements

800,000

Total Community Development and Public Works 800,000

Community ServicePark Improvements

Renwick ParkReplace Lighting on Fields 1 and 3 110,500

Stevenson ParkResurface Jogging Trail 25,000 Add (15) New Electrical Outlets 7,800

Leavesley ParkAwnings for Two Entry Doors 8,400

Facility ImprovementsCity Hall

Renovation of Municipal Court Office 37,562 Activity Building

Repave Asphalt Parking lot 28,000 Total Community Service Improvements 217,262

Total General Fund 1,017,262

Community Development and Public WorksSewer Improvements

Neighborhood Sewer Line Replacement Program 715,384

Total Community Development and Public Works 715,384

Total Water and Sewer Fund 715,384

Total Capital Improvements 1,732,646

CAPITAL IMPROVEMENTS

General Fund

Street Improvement Program

Water and Sewer

PolicePatrol

Replace Camera System in Jail 7,500

Criminal InvestiagtionHostage Negotiator Rescue Phone 5,000

20,000

Animal Control5,000

Total Police 37,500

Fire Marshal

Emergency Management

16,000 Total Fire Marshal 16,000

Community Development and Public WorksStreet Operations

New One Ton Bucket Truck 40,000 * Replace 1980 GMC Dump Truck 36,000

** 16,985

Total Community Development and Public Works 92,985

Community ServicesPark Operations

Old City ParkReplace Playground Equipment 14,000

Leavesley ParkPlayground Equipment and Fall Area 14,000

Total Community Service 28,000

Total General Fund 174,485

* Actual vehicle cost is $72,000 with General Fund and Water and Sewer Fund sharing equally in the cost.

** This vehicle is on the Vehicle Replacement Plan (see next page) to be replaced with a Ranger classvehicle. This is an additional cost to upgrade that vehicle as noted. Total cost of the vehicle is $30,500.

General Fund

Early Warning Siren System

Cage for Animal Control Truck

CAPITAL EQUIPMENT

Upgrade 1992 Ford F-150 to One Ton Crew Truck

Unmarked Vehicle for Deputy Chief

CAPITAL EQUIPMENT

Fire Marshal

FVFD Firefighting and EMSReplace Ambulance 47 ######Upgrade Lifepak 12 to 12 Lead Capability 20,000

5,000 Total Fire Marshal ######

Total Fire/EMS Donation Fund 125,000

Vehicle Replacement PlanPolice

Patrol

Replace Five Marked Patrol Interceptors ######

Total Police ######

Community Development and Public WorksStreet Operations

Replace 1992 Ford F150 13,515 Water and Sewer Operations

Replace 1990 Ford F350 30,500 Total Community Development and Public Works 44,015

Total Vehicle Replacement Fund 187,080

Community Development and Public WorksWater and Sewer Improvemenets* Replace 1980 GMC Dump Truck 36,000

10,000 Total Community Development and Public Works 46,000

Total Water and Sewer Fund 46,000

Total Capital Equipment 532,565

Upgrade Radios to 800 MHZ

Hydraulic Jack Hammer Attachment for Backhoe

Vehicle Replacement Fund

Fire/EMS Donation Fund

Water and Sewer Fund

Community ServicePark Operations

Stevenson ParkReplace Worn/Broken Parts to Compan Castle 8,000

Leavesley ParkReplace Existing Fence Along North Border of Property 2,925

Facility OperationsPublic Works

Replace Attic Air Handlers 4,800

Total Community Service 15,725

Total General Fund 15,725

Community Development and Public WorksSewer Operations

Sanitary Sewer System Cleaning & Rehabilitation Program 125,000 Total Public Works Improvements 125,000

Total Community Development and Public Works 125,000

Total Major Repairs and Maintenance 140,725

Water and Sewer Fund

MAJOR REPAIRS AND MAINTENANCE

General Fund