Hutto’s financial outlook mixed

Financial reports recently released by the City of Hutto give cause for optimism, but also show the city government’s financial health is being impacted by fallout from the current global recession.

According to the quarterly investment report, the city currently has more funds available than at the same point in previous years — $11.4 million as of the latest report, compared to $10.2 million in 2007 and $7.09 million in 2006.

City of Hutto Finance Director Laurie Brewer said the investment report is only a “snapshot” of the city’s cash on hand and the value of its current investments, but several other indicators show the city is not facing any immediate financial issues caused by the problematic economy.

Nonetheless, Hutto’s growth is dependent upon larger economic trends and is not immune to the recession.

“While Hutto continues to be depicted as the fastest growing city in Texas, the national economic recession is impacting Hutto’s growth,” Brewer said.

As credit has become harder to obtain, new housing developments have grown riskier and therefore less common in Hutto, leading to less revenue from building permits.

“Building and development fees have decreased significantly over the past two years,” Brewer said. “Building permits continue to decrease, mirroring the trend in other Williamson County cities.”

2006 was Hutto’s peak year for development in the city limits. In the fiscal year ending in Sept. 2006, the city brought in more than $1.9 million from building and development fees, but that number dropped to $1.1 million in the following fiscal year and to just $782,409 in the fiscal year ending in September 2008 — a 59 percent drop from the high in 2006.

“Everybody is seeing slower housing starts,” Brewer said. “We are worried about the building fees, but it’s not unusual in this market.”

On the flip side, Hutto has benefited from steadily increasing sales tax revenues, which have risen corresponding with more retail shopping opportunities in the city. Furthermore, as the economy has become more strained, some local families may be trying to save money on gas by shopping within Hutto, which helps keep more money in the city through sales tax.

The city generated $1.04 million in sales tax revenue in fiscal year 2006. That figure grew to $1.19 million in 2007 and $1.44 million in the fiscal year ending in September of this year.

“The city has continued to experience growth through December collections of over 11 percent over the previous year,” Brewer said.

Another indication of the city’s economic strength is the steadily increasing revenue coming from property taxes: $3.3 million in fiscal year 2008, up from $1.8 million in the fiscal year ending in September 2006.

Because of the increased revenue, the city has been able to put more money into the general fund, thereby improving Hutto’s financial stability.

“The city has increased reserves in the general fund, which has helped the city earn a bond rating upgrade,” Brewer said. The Standard and Poor’s bond rating — equivalent to a credit rating for municipalities — was upgraded from BBB+ to A+.

As of September of this year, the city had $1.1 million in reserves in the general fund, compared to $757,000 at the same point last year and $306,000 in September 2006.

The city’s financial outlook is strong, but if revenue from building fees continues to decline, Hutto may have to look for ways to save money in the coming year.

“The city’s budget is being closely scrutinized for potential savings that will be needed to offset any continuing revenue shortfalls,” Brewer said. “We may have to go in and tighten our belts.”

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