FY 2024 Approved Budget
The City is pleased to present this summary of the approved annual budget for the fiscal year which begins July 1, 2023 and ends on June 30, 2024. The general fund budget is balanced, with revenues meeting expenditures.
For more information on the FY 2024 Budget, please find the following links:
Each year, the budget process provides the opportunity to assess where we are as a community and the opportunities that lie ahead. Franklin remains one of the most desirable places to live in America. Top rating by publications such as Money magazine, Southern Living, USA Today, and Livability consistently places Franklin among the best places to live in America. Investment and job growth also reflect Franklin’s remarkable economic vitality and competitive position. During calendar year 2022, private investment reached the highest level in Franklin’s history with $874 million in direct construction investment. Over the past two years, six corporate headquarters announced their move to Franklin which is projected to create over 2,000 new jobs. Franklin’s unemployment rate continues to be among the lowest in the state of Tennessee. These statistics and rankings are reflective of both the strength of our local economy and Franklin’s excellent quality of life. Our All America City is honored to be the community so many are choosing as the place to invest, build a business, raise a family, spend a vacation, and most of all, the place they proudly call “home.”
Beyond these statistics and ratings, our City of Franklin team values the opinions and perceptions of citizens. In late 2022, the City surveyed a wide range of Franklin citizens through a national survey used by more than 600 communities across the United States. The City used this same survey instrument 2016 and 2019. Our goal in conducting the survey was to ask Franklin citizens the simple but important question: “How are we doing?” The results were encouraging, with 97% of survey respondents rating Franklin’s quality of life as excellent or good (ranking 7th nationally; 1st among cities of a similar size) and 96% rated Franklin as an excellent or good place to raise children (ranking 7th nationally; 1st among cities of similar size). The overall quality of City of Franklin services was rated excellent or good by 89% of respondents with especially high marks for the feeling of neighborhood and downtown safety at 99% excellent or good. Employment opportunities and the vibrancy of our downtown and commercial areas ranked second nationally. While we are encouraged by this very positive feedback, citizens did express concerns throughout the survey regarding the impact of growth affecting Franklin’s quality of life—specifically traffic/congestion and housing affordability.
Significant infrastructure investment continues through the City’s Invest Franklin initiative that supports our 10-year, $380 million Capital Investment Plan. Recent highlights include the completion of the 96 West Multi-Use Trail, the opening of renovated ballfields in partnership with Franklin Special School District, and completion of an award-winning bridge to connect the community to the site of our future park in southeast Franklin. Later this year, we will see the completion of the City’s expanded and upgraded Water Reclamation Facility and the opening of the Franklin Road improvements.
Despite these successes, significant challenges remain. The City of Franklin continues to be bolstered by strong long-term financial plans and policies that provide vital financial capacity to meet both challenges and opportunities. Our best efforts will be required to meet the demands that lie ahead. The City must continue to deliver high-quality services, enhance existing infrastructure, and prepare for growth in terms of services, infrastructure, and community impact. The City of Franklin will craft a budget and action plan that is both fiscally prudent and consistent in maintaining our commitment to high-quality community service.
The 2023-24 (FY24) General Fund budget is $102,534,136, which represents an increase of 3.4% compared to the current $99,187,604 budget for 2022-23 (FY23). The FY24 budget for all funds is $218,138,422, which represents an increase of 0.5% compared to FY23.
Highlights of the 2023-24 Budget
• The budget is balanced.
• The budget fully complies with the Board of Mayor and Aldermen’s debt and fund reserve policies.
• Essential service levels are maintained.
• The City property tax rate remains unchanged at $0.3261 per $100 of assessed valuation. The Invest Franklin dedicated funding for infrastructure/transportation investment and support of City operations remains in place. The City of Franklin has the lowest property tax rate of any city in Tennessee with a population over 50,000, and its rate is among the lowest of comparable cities nationally.
• A pay increase for City team members will be effective the first pay period of July 2023. The approved budget includes a general pay increase of 3% plus an additional performance-based pay increase of up to an additional 2.5%.
• The budget includes three new positions in the General Fund. The new positions are three new firefighters, one per shift. Several position reclassifications are included in the areas of Communications, Streets, Police, and Fire. There is one additional position in the City’s Water Management utility, although the total number of funded positions remains the same.
• Health insurance premiums for City team members are projected to remain unchanged for FY24.
• The FY24 budget includes a $1 per month increase for residential trash and recycling collection (from $22/month to $23/month). Consistent with our five-year utility rate plan, water rate increases of 3% for both calendar year 2024 and 2025 are expected. Sewer rates are expected to increase 2.5% in 2024 and 2% in 2025.
• The budget incorporates performance measures and sustainability initiatives for every department. The connection to our Strategic Plan, FranklinForward, is clearly linked to performance measures and objectives throughout the budget.
General Fund Overview
In total, General Fund revenues for FY24 are projected at $102.5 million, an increase of 3.4% over the current FY23 budget of $99.2 million. The following is a summary of revenue by category.
Sales Tax. The City’s largest single revenue source continues to be sales tax. Local sales tax collections are projected to account for 58.1% of total General Fund revenue. The FY24 sales tax budget of $59.5 million represents a projected increase of 2% compared to the FY23 budget. Over the past two years, there has been substantial growth overall in the sales due to inflationary pressures, economic growth in the community overall, and strong on-line sales tax collection by the state of Tennessee. In 2018, Williamson County voters approved an additional 0.5% Local Option Sales Tax. After dedicating the first three years of this additional sales tax to public education and consistent with the original plan, half of the City’s portion of the additional 0.5% Local Option Sales Tax increase has been dedicated to General Fund operations with the other half dedicated to support the City’s capital investment plan (CIP). Overall, the City is assuming a modest 2% growth in sales tax in FY23. This conservative assumption is an added protection against an economic downturn.
State Shared Revenue. The second-largest category of revenue, state shared revenue, accounts for 15.9% of total General Fund revenue and is projected to be $16.3 million, an increase of 2% compared to the FY23 budget of $16 million. This increase is also a relatively conservative projection compared to the recent strength of State sales tax collections.
Property Tax. The third-largest revenue source for the City’s General Fund is property tax, which accounts for 11.3% of General Fund resources. The amount of property tax revenue going to General Fund operations for FY24 is $11.6 million, compared to $10.7 million budgeted in FY23. The General Fund portion of property tax revenue ($11.6 million) is the result of the total property tax of $24.2 million minus $11.5 million in transfer to the Debt Service Fund for General Fund debt obligations and $1.1 million transferred to the Street Aid Fund. In December 2021, the City retired the Industrial Development Board debt associated with the Tax Increment Financing District in the McEwen-I-65 area (sometimes referred to as the Nissan TIF). FY24 marks the first year where all of the property tax attributable to the former McEwen TIF District flows to the General Fund.
In the FY24 budget, The City property tax rate remains unchanged at $0.3261 per $100 of assessed valuation. The Invest Franklin dedicated funding for infrastructure/ transportation investment and support of City operations remains in place. The City of Franklin has the lowest property tax rate of any city in Tennessee with a population over 50,000, and its rate is among the lowest of comparable cities nationally. Click here for a history of property tax rates in the City of Franklin.
Alcohol Taxes. Local governments in Tennessee receive wholesale beer/liquor taxes from distributors and privilege taxes from local businesses that serve liquor by the drink. For the FY24 budget year, these various alcohol taxes are projected to generate $5.5 million, accounting for 5.4% of General Fund revenue. The projected FY24 revenue is an increase of 3.5% compared to the FY23 budget.
Franchise Fees. The collection of franchise fees from cable and gas utility providers accounts for 2.5% of General Fund revenue. For FY24, $2.55 million is projected in franchise fees, a modest 1% increase compared to FY23.
Building Permits and Licenses. The budget incorporates an assumption that the pace of development will remain relatively steady with a slight decrease in activity in the coming year. The budget for building permit and license fees revenue is projected at $2.3 million for FY24, a decrease of 14% compared to FY23, yet is similar to the revenue generated in FY22. These fees allow the City to recover the costs associated with providing construction-related services. Building permit and license revenue accounts for 2.2% of the General Fund revenue.
Other Revenues. Other revenue categories of note include grants, municipal court fines/fees, and interest income. Grant revenue is projected at $1.3 million in FY24 an increase of $560,500 compared to FY23. Court fines/fees are projected at $381,677 in FY24. Interest income is projected to grow to $116,600 in the FY24 budget, an increase from the $100,000 in revenue expected in FY23. All other revenues in these categories are projected to be relatively stable compared to prior years.
As described above, the total available resources within the General Fund is $102.5 million for FY24. The following chart displays a summary of expenditure activities within the proposed budget by service area. Public safety remains the largest expenditure in the City’s General Fund, representing 48.5% of the total budget.
Employee Earnings and Benefits. The cost of wages and benefits for City team members (employees) accounts for 72% of the City’s General Fund budget. Overall, employment-related costs are projected at $73.8 million, a 3.5% increase compared to the current budget of $71.3 million. Health insurance premiums for City team members are projected to remain unchanged for FY24.
Position Vacancies. Again this year, the budget includes a turnover factor of 3.5% that is applied to budgeted wages and salaries. This method anticipates there will be some employee turnover during the year that will result in budgetary savings. By conservatively estimating this amount, the City can apply budget dollars to other non-personnel components of the budget. The City’s actual vacancy experience over the past several years has been approximately 6%. While conservative compared to recent experience, the 3.5% turnover factor employed in the budget will continue to be monitored closely.
Pension Expense. The City’s single employer Defined Benefit Pension Plan (the “Closed Plan”) was closed to new participants effective December 31, 2016. Beginning January 1, 2017, and thereafter, new hires are members of the Tennessee Consolidated Retirement System (“TCRS”) Legacy Defined Benefit Pension Plan (the “Open Plan”), a multi-employer pension plan administered by the State of Tennessee Department of Treasury. While TCRS has agreed to manage certain aspects of the Closed Plan, primarily investment of assets and payroll services, the City continues to oversee the remaining functions in accordance with terms of the plan and the State of Tennessee Public Employee Defined Benefit Financial Security Act of 2014. For FY 2024, the City will appropriate the actuarially required contribution of $7,019,360 to the Closed Plan. City contribution to the Open Plan for FY24 is 7.35% of salary.
Employee Benefits. For several years, the City has adopted a specific approach to sharing health insurance costs with employees. Using this policy, the City pays 85% of the premium for single coverage and 80% of the premium for employee family coverage for active employees. The City’s premiums for health, vision, and dental insurance are projected to remain flat for FY24. Beginning in FY19, the City began offering team members the option to use a high-deductible health insurance plan paired with a health savings account. Premiums for the high-deductible plan will also remain flat in FY24.
Operations. The operations expenditure category is a broadly defined category that encompasses non-personnel and non-capital activities. It includes utilities, supplies, contractual services, repairs and maintenance, and vehicle fuel. In total, operational expenses account for 25.3% of General Fund expenditures. The FY24 budget amount for operational expenses (inclusive of interfund transfers) is $26 million, an increase of 0.9% compared to FY23.
Transfers to Other Funds. The General Fund budget includes transfers from the General Fund to other funds to support operations and capital projects. The FY24 budget includes $7.3 million of transfers to other funds, a decrease of $2.3 million compared to FY23. Transfers fall into two categories. The first are ongoing transfers - $500,000 from the General Fund to the Street Aid and Transportation Fund in FY24 which funds the “sidewalk gap” projects approved as a part of the Invest Franklin initiative and a new asset paving initiative for City owned trails, parking lots, driveway aprons, etc., $771,473 from the General Fund to the Transit Fund (flat funding compared to FY22), and $312,810 for the new Capital Vehicle and Equipment Replacement Fund for the annual replacement of Police vehicles. The second category of transfers include $5.75 million from the General Fund to the Capital Projects Fund for approved CIP projects. There is no budgeted subsidy planned for the Sanitation and Environmental Services Fund. The subsidy to this fund has moved from a $4.5 million General Fund subsidy in FY2008 to no budgeted transfer in the past three fiscal years.
Capital Expenditures. Capital expenditures are defined as the purchase of equipment, vehicles, machinery, and computer hardware/software that has a multiyear useful life and a cost of more than $50,000. This category does not include the Capital Investment Program (CIP), which is the plan for implementation of large-scale public infrastructure and building projects. For the FY24 General Fund budget, capital expenditures are projected at $2.7 million, an increase of 29.6%. The FY24 capital expenditures include high-priority equipment replacement, including police cruisers (various replacements were deferred as a part of previous budgets and/or were impacted by manufacturing delays) along with software upgrades for Finance and Risk Management. In FY23, the City created a Capital Vehicle and Equipment Replacement Fund. This fund will be “seeded” with $1.5 million at the end of FY23 and an additional $312,810 in FY24. Annually, the City’s operating funds will contribute to this fund, which will support the systematic replacement of capital equipment and vehicles.
Outside Agency Funding. The City funds various government, human service, nonprofit, and community service organizations through its budget each year. In total, the FY24 budget funds these organizations at $685,758, an increase of $24,730 compared to the FY23 budget. The City’s contract with Williamson County Animal Center is increasing by $9,041 for city-wide animal control services. The FY24 budget provides a 5% increase to all agencies as a recognition of the inflationary pressures being experienced by all agencies.
Cash Reserves and Bond Rating. Two key measures of a city’s financial health are its reserves and its bond rating. The City of Franklin has adopted a reserve policy that identifies a minimum 33% General Fund reserve as an important benchmark. The City of Franklin is projected to end the current fiscal year (FY23) with a General Fund reserve of $77.1 million. With no draw from General Fund reserves planned, this same fund balance is projected for FY24. The reserve level of $77.1 million represents 75% of annual revenue and expenditures at the end of FY24. In 2014, the Board of Mayor and Aldermen identified a policy to permit the use of reserves above 45% for “pay-as-you-go” funding of capital investment projects. Given this policy and the current projections for General Fund cash reserves, up to $31 million from reserves could be available for funding capital projects.
Despite the challenges and uncertainty of recent years, the City is maintaining significant reserves to comply with BOMA policy and to protect against future economic downturns. The BOMA-adopted debt policy and fund reserve policy provide a needed framework for maintaining the City’s Triple-A bond rating by both Moody’s Investors Services and Standard & Poor’s. In recent years, the City’s Triple-A ratings from both rating agencies have been reaffirmed. Bond ratings generally reflect the overall financial strength of the governmental entity, the strength of overall management of the organization, and the health of the local economy. Franklin’s rating from two bond-rating agencies is the highest possible and places it in a select group of cities across the United States.
Other Operating Funds
Street Aid and Transportation Fund. The City receives the local share of the state gasoline tax to fund the maintenance of local streets. The FY24 budget for this fund is $6.6 million, an increase of 25.7% compared to FY23. The City was able to transfer an additional $750,000 from the General Fund to assist with pavement preservation efforts. Included in this budget is approximately $1.1 million from the City’s property tax revenue to fund additional neighborhood street resurfacing. In recent years, the City has implemented a more comprehensive pavement preservation program that utilizes various techniques such as pavement rejuvenation and additional sealing along with resurfacing to ensure Franklin’s local street network is well maintained. Beginning in FY24, the City has added a $250,000 transfer from the General Fund to support the new Asset Management Paving program, which will provide annual funding for the paving management of non-roadway City assets such as trails and parking lots.
Sanitation and Environmental Services Fund. The FY23 budget for the City’s Sanitation and Environmental Services Fund is $14.7 million, an increase of 13% compared to FY23. The FY24 budget includes the addition of a second air curtain burner for wood waste (funded by the City Facilities Fund), the replacement of a rear loader and knuckle boom loaders. Over the past the year, the City negotiated long term agreement for landfill capacity and recycling processing. These new intergovernmental agreements provide both capacity and certainty regarding rates for at least the next 10 years. The FY24 budget includes a $1 increase in the monthly customer fee from $22 per month to $23 per month. For the past three out of the past five fiscal years (FY19-FY23) there has not been a General Fund subsidy budgeted for the Sanitation Fund. In FY 23, the general fund provided $500,000 to meet additional operating cost and maintain the State-mandated fund balance. There is no General Fund subsidy to the Sanitation Fund anticipated in the FY24 budget.
Road Impact Fund. Revenue collections within the Road Impact Fund continue to be solid in recent years thanks to strong development activity. Revenue in this fund is projected at $6.8 million for FY24, an increase of 49.6% compared to FY23 projections. The FY24 budget includes $10.7 million in expenditures. The budget anticipates $2.8 million in expenditures as a transfer to the Debt Service Fund. This transfer pays the principal and interest on arterial road projects the City has undertaken to account for trip generation due to new businesses and residential development. The fund also includes direct contributions to approved projects within the Invest Franklin Capital Investment Program plus payments/offsets associated with existing agreements with developers who have provided right-of-way and/or have built elements of the City’s arterial road network. In 2017, the Board of Mayor and Aldermen expanded the road impact fee to include collector roads. A review and update of the City’s Road Impact fee structure has recently begun and will likely conclude in FY24 with recommendations to update the Road Impact fee structure.
City Facilities Tax Fund. The Facilities Tax Fund provides for the collection of privilege tax for new development to help pay for new public facilities/equipment attributable to growth. The FY24 budget includes $194,525 for purchase of a new equipment in the Sanitation and Environment Services Department and $68,437 for a new equipment in the Parks Department. This new equipment will support expanded services to new homes built in Franklin in recent years and to support expanded Parks operations. In total, the City Facilities tax includes $3.8 million in appropriation for capital investments and new equipment needs driven by growth. The Facilities Fund also includes capital project funding support of $3.5 million each toward the Bicentennial Park and the Robinson Lake Dam repair/park project. It should be noted that the facilities tax rates have not been updated since 2007.
County Facilities Tax Fund. This fund was created in FY18 to account for facilities taxes collected by Williamson County on behalf of cities. Prior to the creation of the County Facilities Tax Fund, these funds were incorporated in the City’s Capital Projects Fund. The Board has targeted these funds to address infrastructure needs associated with schools and other public facilities. The FY22 and FY23 budgets have included support for a portion of the recently completed 96 West multi-use trail project that connects the Freedom Middle School-Poplar Grove School campus with the Freedom Intermediate-Johnson Elementary School campus. The FY23 budget included $600,000 of funding for the trail project. At this time there is not an appropriation from the County Facilities tax included in the FY24 budget.
Stormwater Fund. Residents and businesses pay fees to support the City’s efforts to manage stormwater quality and quantity programs and initiatives. The Stormwater Fund budget is $3.6 million for FY24, an increase of 3.2% compared to FY23. The FY22 budget included a 5% increase in Stormwater fees, the first rate increase since the fee was created in 2004. A financial analysis on the fund shows that this modest rate increase will sustain this fund through the next five years of operation. In 2017, the City obtained Qualified Local Program status, which allows the City to act on behalf of the State in making regulatory determinations. This capability has enhanced the City’s responsiveness and efficiency in working with development.
Drug Fund. The Drug Fund is used to collect drug-related fines and confiscations received through the City’s enforcement efforts. These funds are also used to support drug investigations and related law enforcement initiatives. The FY24 budget includes expenditures of $152,004, an increase of 1.2% compared to FY23.
Hotel/Motel Tax Fund. The City of Franklin levies a 4% local lodging tax on the gross receipts of hotels. Through the Hotel/Motel Fund, the City has historically paid debt service on the Conference Center (this debt is now retired); the purchase of land for park expansions (Harlinsdale, Eastern Flank, and Carter Hill); capital investments to parks; and certain streetscape elements of road improvements that beautify the City and encourage tourism. The City also dedicates one-fourth (or 1%) of the 4% tax to support the Williamson County Convention and Visitors Bureau. Franklin’s visitor and tourism industry has experienced a strong, steady recovery and now is consistently surpassing pre-COVID activity levels in terms of occupancy and average daily room rate. The FY24 Hotel/Motel Tax Fund budget is $3.6 million, a decrease of 31% compared to FY23. These expenditures include support for the Convention and Visitors Bureau ($1,308,025), debt service for tourism related projects ($1,154,543), and direct funding for tourism-related parks projects (approximately $1.0 million).
Parkland Dedication Fund. Several years ago, the City created a system through which residential development would contribute to either park land/facilities or make a financial contribution for the expansion of park land/facilities to ensure park services and amenities can appropriately meet the needs of new neighborhoods. Currently, the Parkland Dedication Fund includes a fund balance of $7.5 million. In recent years, the Board of Mayor and Aldermen has made amendments to the Parkland Dedication Ordinance with goals to create incentives for developers of residential property to incorporate amenities within their developments and to better align the fee-in-lieu-of structure with the true cost of purchasing and developing new parks. Capacity within the Parkland Dedication Fund has been identified to fund priority initiatives within the Invest Franklin Capital Investment Program. In the FY24 budget, the Parkland Dedication Fund includes $3.8 million as a transfer to the Capital Project Fund to support three approved capital investment plan projects: $1.1 million for Liberty Park, $2.5 million for Southeast Park and $110,000 for design work of a greenway from Pinkerton Park to Franklin Road.
Transit Fund. The City maintains a special revenue fund to account for the operation of the Franklin Transit System. The system is funded primarily by a General Fund transfer, state and federal grants, and rider fares. The General Fund transfer to the Transit Fund for FY24 is $771,473, a decrease in funding from the FY23 budget of 5.79%. In total, the Transit Fund budget for FY24 is $4.4 million, a decrease of 0.8% compared to FY23.
Community Development Block Grant Fund. The City segregates funds received through the Federally-funded Community Development Block Grant (CDBG) program to specifically benefit low- and moderate-income families and neighborhoods. For FY24, funding is recommended to be $375,000, a decrease of $322,000 compared to the FY23 budget. This reduction is reflective of the send down in recent years of the targeted, additional COVID-related funding that came through from the Federal government through the CDBG structure. CDBG funding is subject to federal appropriation and potential budget cuts. If federal budget cuts occur, appropriate reductions will need to be made to the City’s CDBG program.
Debt Service Fund. In FY10 the City created a separate Debt Service Fund. The fund is used to account for resources set aside to fund debt service and the actual principal and interest payments. The FY24 budget for the Debt Service Fund is $16.3 million, which is an increase of 3.7% compared to FY23. Overall, the debt service obligations of the General Fund are handled by designation of property tax directly to the Debt Service Fund. The FY24 budget includes $11.6 million of property tax for payment of general obligation debt service. The Debt Service Fund also receives transfers from various operating and special revenue funds to cover debt obligations related to those funds.
Capital Vehicle and Equipment Replacement Fund. In FY23 budget, the City created a Capital Vehicle Replacement Fund. This fund will be “seeded” with another $1.5 million at the end of FY23. Annually, the City’s operating funds will contribute to this fund, which will support the systematic replacement of capital equipment and vehicles. The FY23 budget includes a contribution of $312,810 transferred from the City’s general fund. The expenditure budget from the Capital Vehicle and Equipment Replacement Fund for FY23 will be $3.2 million for the purchase of approximately 43 commercial fleet vehicles/equipment and an additional 11 police cruisers.
Water Management Fund. The City of Franklin operates water treatment, water reclamation (wastewater treatment), and reclaimed water utility systems. The operations of the water management utilities are entirely funded through rate-payer revenue. The FY24 budget consists of $17.1 million for water, $30.4 million for water reclamation (sanitary sewer), and $370,124 for reclaimed water. In total, the combined FY24 Water Management budget is $47.9 million, an increase of 12.3% compared to FY23. This increase in largely driven by increase debt service associated with City’s upgrade and expansion of the Water Reclamation Facility.
Since 2009, the City has adopted five-year rate plans based on projected costs of operation. Consistent with the five-year rate plan, the FY24 budget includes rate adjustments of 3% for water and 2.5% for wastewater, which would go into effect on January 1, 2024. The Board will also be asked to consider adopting a 3% rate increase for water and 2% increase in wastewater effective January 1, 2025.
Despite the challenges and uncertainty facing communities across the country, the City of Franklin is in excellent financial condition. Our reserves are at strong levels, our debt obligations are relatively low and manageable, and our tax rates are among the lowest in America. Continued strong financial management and strategic investment will position the City of Franklin to succeed and thrive.
Many throughout the City organization contributed countless hours toward the completion of the budget. Their commitment to public service and to the betterment of the City of Franklin is inspiring. Specifically, I would like to extend my appreciation to Assistant City Administrators Kristine Brock, Vernon Gerth, and Mark Hilty; Budget and Strategic Innovation Manager Michael Walters Young (the leader of our budget process); Financial Analyst Norma Lockney; Management Fellow Chris Franklin, Comptroller Mike Lowe; Human Resources Director Kevin Townsel and Human Resources Generalist Delaney Childress; our Leadership Team (department directors and other key staff); and the Administration and Finance department staff teams, whose support and leadership have been instrumental to the budget process.
Finally, I am grateful to the Board of Mayor and Aldermen for their guidance, stewardship, and support. Through their leadership and the efforts of our great team, the City of Franklin continues to chart a course for a promising future.
Eric S. Stuckey