Sometimes in Central Texas, to go up, one has to go down.

The cities of Round Rock and Pflugerville have decreased their residential property tax rate but expect to see gains in their budgets because of rising property values. The city of Hutto, on the other hand, will keep its tax rate the same for fiscal year 2014–15.

City staffs work on the budgets throughout the year and typically present the budgets in August or September to their respective city councils.

"When you run a city budget it's like having a corporation with several different business units," said Cheryl Delaney, finance director of the city of Round Rock. "The spending stream for the fire department is very different from the police department, which is very different from the parks department."

Round Rock

Round Rock's property tax rate for FY 2014–15 will decrease from $0.41949 per $100 of valuation to $0.41465 per $100 of valuation. The overall budget will increase to $151.9 million from $144.2 million because of an almost $1 billion increase in assessed taxable value from 2013.

"A billion dollars extra, for a city our size, that's huge," Mayor Alan McGraw said. "That's why we reduced the rate by [nearly] half a cent, but we also had the bonds to pay for so we were mindful about that."

The debt service fund will receive $15 million, or 9.9 percent of the budget. This will go toward paying down the bonds Round Rock residents approved in November to pay for city and road projects.

McGraw said the city kept the tax rate at the levels City Council promised residents when the bond election was underway.

FY 2013–14 sales tax makes up 51 percent of the city's revenue, according to budget documents. Fiscal year 2013-14 sales tax revenue increased by 7 percent because of a healthy local economy and growing retail sector, a draft budget states.

Of that amount, Dell Inc. accounts for 27 percent of the sales-tax revenue, according to a draft budget. However, the city has a plan to reduce that to 20 percent by 2017. Any amount over that goal will be used to pay down city debts and decrease reliance on a potentially volatile funding source.

Under the adopted budget, residents will see their water and wastewater rates go up roughly 2.5 percent. It is the first rate increase in four years. Delaney said rising costs for facilities, personnel and utilities led to the increase.

"We're not trying to make a profit," Delaney said. "We're just trying to break even."

Delaney said Round Rock still has one of the lowest water rates in the area.

With its increased revenue, Round Rock will hire additional staff for the city such as new positions for police and emergency call takers. The city will also contract with Round Rock ISD to hire four additional school resource officers, which are specially trained police officers who work in schools.


Pflugerville city leaders made one of the largest property tax rate decreases of any city in Central Texas. City Council and the mayor agreed in Sept. 23 to lower the property tax rate by $.04 to $0.5336 per $100 of valuation.

Property taxes represent the largest single revenue source for the city; they account for about 47 percent of the city's revenue, according to a draft budget.

Most Pflugerville property owners will still pay higher property taxes compared with the previous year because of increased home values.

At a Sept. 9 City Council work session Mayor Jeff Coleman said creating Stone Hill Town Center was the first "domino" that has led to a falling property tax rate.

In the early and mid-2000s Pflugerville had one of the highest property tax rates in Central Texas.

"We are no longer looked at as the pariah of city governments in Central Texas," Coleman said at the meeting in reference to the property tax rate.


Like Pflugerville and Round Rock in FY 2013–14, Hutto experienced increases in population, sales tax revenue and property values compared with the previous fiscal year.

Hutto leaders in September elected to keep the city's property tax rate constant at $0.528691 for the third consecutive year.

Hutto averaged nearly 50 new single-family home starts per month in the past year, according to city planning data.

"Not only have property values gone up, but we've added quite a bit of new value from new home construction," Hutto Assistant City Manager Micah Grau said.

Capital improvement projects represent the largest single line-item expenditure in Hutto's FY 2014–15 budget at $21.32 million.

"Those are the high-ticket roadways, utilities, the bigger infrastructure projects," Grau said.

The largest portion of the capital improvement projects budget—at a cost of $20.5 million—will go toward construction of a new wastewater treatment plant and force main. The city received funding for the project through a loan from the Texas Water Development Board, Grau said.

The city will use about $754,000 from the city's general capital improvement funds to improve the co-op site and south gin building.