Page 17 - Approved Annual Budget FY 2019-2020_Flat

The City’s overall budgeted resources to be generated this year aggregate $432M. Of that amount,
transfers-in account for $57M with the balance of $375M related to revenues. Expenditures and transfers-
out are budgeted at $479M of which $57M are transfers-out and $25M for debt—leaving $397M in
expenditures/expenses. Almost 41% of the budgeted expenditures are capital projects related. City fund
balances and/or working capital as of September 30, 2020 are estimated to total to $191M—a $47.8M
decrease due to spending down debt and undertaking more capital projects.

A detailed financial analysis of this year’s budget appears in the Executive Summary, following this
message.

LONG-TERM CONCERNS AND ISSUES

Impact of National Economy and Mexico on City’s Economy
The City’s economy had maintained an excellent financial position when the economy was at a slowdown
due to its foresight in planning. As a hedge, the City’s economy is largely tied to that of Mexico, particularly
Northern Mexico. The Texas economy, particularly as measured by construction, has shown a strong
recovery in fiscal year 2015-16. The City has recently experienced a downturn in recent years attributed
to the devaluation of the Mexican peso and issues across the border. The economic index is gradually
increasing to last year’s level.

The City has included as part of the Proposed Operating Budget cycle a multi- year plan. It will summarize
general methods the City should follow over the long-term to maintain and increase the ability of the City
to deliver services over maintaining and increasing revenues and monitoring the cost of services.

Growth
As noted earlier in this message, over a larger horizon perspective, the City has experienced dramatic
growth. In addition, while growth has been accompanied by economic prosperity, it also presents its own
challenges. Although much has been done to provide an adequate transportation system that continuously
alleviates traffic congestion within the City as well as an adequate drainage system, there is much to be
done.

Quality of Life Issues
The City has been developing over time from a small-to-medium sized city toward a larger city status,
which has brought about an increased emphasis on quality of life issues.

Economic Development
As has been noted, the City’s economic progress over the last 10-15 years has been truly remarkable by
almost any standard, including growth in taxable values, job growth, personal/family income, a significant
decline in the traditionally high unemployment rate, etc.

Financing Capital Costs
On May 5, 2018, City of McAllen voters approved a bond proposition for $22 million for drainage
improvements. Over the next five years, the City of McAllen will embark on an impressive schedule to
complete 23 projects. In addition, the citizens approved another bond proposition for $3 million for
traffic improvements. Prior to this, a significant amount of capital projects has been financed on a pay-as-
you-go basis using surpluses generated by the General Fund as well as monies funded by State Grants.

2019-2020 Budget Message vi