The orders allow the increase without requiring voter approval, which is normally required when a proposed tax rate increase is greater than 3.5%.
In the 2019 tax year, Comal County’s property tax was 37.7915 cents per $100 of property value and Guadalupe County’s was 38.19 cents per $100 of property value.
According to Comal County Judge Sherman Krause, the increase would only be used to meet specific challenges that could arise in the next year.
“It doesn’t mean we have to go up to 8%; it doesn’t mean we have to go over [the proposed] 3.5%,” Krause told the court. “It just means that we have that ability to do it.”
Revenue from the additional rate increase could be used to cover expenditures related to natural disasters or the coronavirus, but it could also be used to avoid dipping into cash reserves to meet normal budget items.
Krause said the recommended budget for 2021 budget would increase the tax rate by 3.5% but would require Comal County to use a portion of its cash reserves for budgeted items.
Comal County Precinct 1 Commissioner Donna Eccleston and Precinct 2 Commissioner Scott Haag expressed concern about using cash reserves to pay budgeted expenses.
A tax increase greater than 3.5% is a potential solution that would avoid cutting budgeted items.
“I like being close to that 3.5%; what I don’t like is spending our cash reserves to make sure we’re underneath it,” Haag said.
Krause and Guadalupe County officials noted that expenses could be cut from the budgets of their respective counties to avoid the tax rate hike or use of cash reserves, but they did not get into specifics of what could go to the chopping block.
Eccleston told her fellow commissioners that dipping into cash reserves could cause trouble later if funds were needed to qualify for Federal Emergency Management Agency support in the event of a flood or if liquidity was needed on short notice.
Legislation passed in 2019 contains a provision that permits the additional tax increase without an election when a state of disaster has been declared.
The orders had to be approved by the courts before the end of July to preserve the option for the 2021 annual budget.
“It doesn’t matter what our rate ends up to be,” Eccleston said. “But this has to be done at a certain point in time in order for us to even consider it in the future.”
Despite the unanimous approval of Order 444 in Comal County, commissioners expressed their intent to keep the tax rate increase as close to 3.5% as possible.
“We’re going to do our best to keep our tax rate as low as we can, but there are things that we have to provide,” Haag said. “And that’s my promise to the people, that regardless of how we vote today on this issue, I’m going to fight as hard as I can to keep that tax rate as low as it is.”
In Guadalupe County, the measure was passed with a 3-2 vote, with County Judge Kyle Kutscher and Precinct 4 Commissioner Judy Cope voting against.
The prevailing argument for the measure was to streamline the process if taxes did need to be increased for an unforeseen reason.
“I think it truly does give us some beneficial options to make decisions in the budget,” Kutscher said. “When I’m really pushed to make a decision, I don’t think we’re going to need it.”