The City of Magnolia, along with Magnolia Independent School District, adopted budgets for the 2010-11 fiscal year last week, both of which made cuts in uncertain economic times.

The Magnolia City Council adopted a $2.1 million budget at a meeting Aug. 23, an amount that is a decrease from the previous year’s budget of $2.4 million.

City Administrator Paul Mendes said the mayor and council worked hard to keep the budget as tight as possible this year and project revenues as best they could.

“We tightened our belt and gave it the best shot we could,” Mendes said. “I think we are as austere as we can get.”

Mendes said the only major cut to the budget this year were across-the-board employee raises, or cost-of-living allowances, which the council and Mayor Todd Kana decided could not be afforded in this year’s budget.

Total revenues for the city are projected at $2,268,277.17, while total expenditures are projected at $2,123,526.91, leaving the city with a surplus of $144,750.26, according to the budget draft released by the city.

Broken down, 40 percent of revenues come from sales tax, 24 percent from the municipal court and 21 percent from property tax. The rest comes from intra-fund transfers, franchise tax, mixed beverage tax, license and permits.

Mendes said Montgomery County Tax Assessor J.R. Moore requests that budgets be in by the first of September.

“I’m delighted,” said City Administrator Paul Mendes. “It’s always good when we can get a budget done on time.”

The Council also passed an ordinance adopting the tax rate at $.4914 for the 2010-11 fiscal year.

The ad valorem rate for debt service was set at $.1695 while the maintenance and operations rate was set at $.3219, creating the total of $.4914 per $100 assessed valuation.

The Magnolia ISD School Board also adopted its budget and tax rates for the 2010-11 fiscal year, which begins Sept. 1, at an Aug. 23 meeting.

School board members unanimously voted to adopt a budget totaling $79,791,294.

The total is a decrease of just over $2 million from the previous year’s budget, according to Chief Financial Officer Erich Morris.

The balanced budget proposes $79,791,294 in revenues and $79,791,294 in expenditures.

Approximately 65 percent of the general operating budget is dedicated to instruction and instructional administration.

The budget is conservatively based on a one percent increase in enrollment, according to the budget information released by the district.

The tax rate adopted by the district went up slightly, from $1.38 to $1.3995.

The school district cited greater debt payment for the approaching fiscal year and less state assistance as a factor in the increase.

The maintenance and operations portion of the tax rate is capped at $1.04, while the interest and sinking portion was set at $0.3595, for a total of $1.3995.

In a move to save money and reduce expenditures, the board approved reducing leave days for district employees from five to two and to not offer 10 half days of extended leave when an employee has exhausted all available leave days.

“I know it’s tough, but we felt like it was the best decision to get a balanced budget,” said Superintendent Dr. Todd Stephens.

In a letter released to the public late last week, Stephens shared his feelings on the budget and tax rate and his concerns for the financial future of the district.

“Unfortunately, some (budget) reductions have eliminated several benefits and “across the board” monetary increases for employees,” he wrote. “In some cases, this has prevented the district from adding staff, making it difficult to attract and retain great teachers.”

He went on to write that if the current Texas School Finance System is not addressed during the upcoming legislative session, Magnolia ISD will be forced to consider two options: budget reductions that could impact student programs and require staff reductions, or hold a tax rate election to raise the tax rate in order to maintain the level of educational quality.

“Neither option is particularly attractive,” Stephens wrote. “And I hope to have the opportunity to discuss this tax rate election and what it could do for MISD in greater detail in the near future.”

For more information on the City of Magnolia and Magnolia ISD budget and tax rates, visit www.cityofmagnolia.com or www.magnoliaisd.org.

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