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Like many other governmental organizations, the City of Coppell uses a fund basis of accounting. Funds are normally established for each major type of revenue for specific functions. Each fund is a self-balancing set of accounts, used to determine the sources and uses of a specific type of revenue stream. The City of Coppell fund types include the General Fund, Debt Service Fund, Water and Sewer Fund, Internal Services Funds, and Special Revenue Funds.
The General Fund is the general operating fund for the City. It is used to account for all financial resources except those required to be accounted for in other funds, such as the Water and Sewer Fund or Special Revenue Funds. All general tax revenues and other receipts that are not allocated by law or otherwise restricted to other funds are accounted for in this fund.
The General Fund is the largest fund for the City, with budgeted expenditures of approximately $68 million. The General Fund accounts for the majority of City services, including public safety, public works, general government and cultural and recreation. Budgeted expenditures include salaries and benefits, supplies, maintenance, services and capital outlays.
General Fund Revenues:
Property taxes comprise approximately 50% of General Fund revenues. In Coppell, approximately 41% of property taxes are collected from businesses.
In addition to property taxes, the City receives revenue from sales taxes. The Texas State Comptroller proposed Rule 3.334 that will substantially change how the City of Coppell collects sales and use taxes. The proposed rule disrupts decades of established local sales tax sourcing rules, and the City will lose substantial sales tax revenue. Coppell and other cities are asking the Comptroller of Public Accounts to reconsider the current proposed rules and, if necessary, may be forced to take legal action if these issues cannot be resolved.
The City of Coppell estimates a 60% reduction in sales tax collection in the General Fund, an approximately $12 million loss. The rule will go into effect with the start of the fiscal year beginning October 2021. In total, the fiscal impact is estimated to be approximately $24 million. This includes the fiscal impacts to the General Fund, Coppell Recreation and Development Corporation, Crime Control and Prevention District and Infrastructure Maintenance Fund.
The City began planning for the loss of sales tax revenue when the rule was proposed by the Texas Comptroller of Public Accounts in December 2019. While planning for the impact of Rule 3.334 in late 2019, City departments analyzed their budgeted line by line to identify expenditure reductions. The City also immediately instituted a hiring freeze and capital reductions. In total, the City was able to identify approximately $5.6 million in expenditure reductions.
Further, the City analyzed existing fund balances to determine the best strategy to mitigate the impact of the expected remaining revenue loss. The City identified two fund balances that will be used to cover the revenue reduction that cannot be accounted for through reduced expenditures: funds that City Council had previously set aside in the City's designated fund balance until designated for use should an issue arise, and a fund that Council had previously set up to be used in case of revenue threats. Transfers from the Water/Sewer Fund and allocations from other fund balances are also being used to mitigate revenue reductions.
The General Fund also receives reimbursements from various funds, revenues from franchise taxes and fees for services and court fines.
General Fund Expenditures:
Over the past 10 years, the General Fund expenditures have increased by an average of 3% each year.
General Fund expenditures are grouped into four categories: Public Safety, General Government, Cultural and Recreational, and Public Works. As most quality of life projects are funded out of Special Revenue Funds, such as the Coppell Recreation Development Corporation, and other sources, the majority of expenditures from the General Fund are associated with hiring and retaining quality personnel that provide essential – and exceptional – services to Coppell residents and businesses.
Public Safety initiatives includes costs associated with the Municipal Court, Fire and Emergency Medical Services, Emergency Management, Police, Animal Services, Environmental Health, and Building Inspections. In the past, the City of Coppell has used General Fund monies to replace cardiac monitors in the ambulance fleet and add Firefighters to support the addition of Fire Station 4. This category makes up the largest portion of General Fund expenditures, approximately 38%.
Cultural and Recreational expenditures include costs associated with Library Services and Parks and Recreation. For example, in the past, the City used funds to update outdated exercise equipment at the Senior and Community Center and The CORE and increase staff accessibility at some facilities in order to help the City be more responsive to customer requests and needs. These programs comprise 21% of the General Fund.
General Government includes costs associated with City administrative personnel. Expenditures for the Mayor and City Council, Human Resources, Community Development, the Finance Department, and Information and Enterprise Solutions, among others, are paid for from the General Fund. This category makes up 21% of the General Fund expenditures.
Finally, Public Works expenditures include costs associated with Engineering, Traffic Control, Streets, and Planning. In the past, the City used revenues from the General Fund to conduct video analysis of the storm water system and a study on the municipal drainage district. City staff used the results of these studies to plan for preventative maintenance projects to ensure that the City's infrastructure will continue to be viable into the future. Likewise, this fund was also used to add pedestrian safety crosswalks and conduct routine maintenance projects that help ensure that the community remains safe, walkable and clean. In recent fiscal years, General Fund expenditures have increased slightly, as the City shifts its focus to redevelopment of infrastructure. Public Works projects make up 19% of the General Fund expenditures.
General Fund Property Tax Use Breakdown
The property tax you pay each year is divided between multiple entities: the City, the school district and the County. The City of Coppell receives approximately 21% of the total property taxes you pay, while the County receives approximately 24% and the school district receives the remaining 54%.
Of the portion of property taxes that the City of Coppell receives, 34% is used to fund essential police, fire and EMS services, with 16% covering public works.
Shift from General Fund to Capital Fleet Replacement Fund
In previous years, large purchases for equipment and vehicles, such as fire trucks and police cruisers, were made out of the General Fund. Because these purchases are not routine, they cause a spike in General Fund expenditures. In order to avoid these large fluctuations to the Fund, the City Council supported the creation of a Capital Fleet Replacement Fund in Fiscal Year 2014-2015.
The Capital Fleet Replacement Fund is used strictly for the purchase of replacements for fleet and heavy equipment items that have been budgeted and purchased since the fund was established. With this fund, whenever the City purchases a vehicle or piece of equipment, in addition to the purchase cost, an amortized portion of the cost is set aside in the Capital Fleet Replacement Fund. The Capital Fleet Replacement Fund is used to make all fleet and equipment replacement purchases. This sound, conservative approach will help level out the large future expenditure fluctuations in the General Fund.