All three cities approved their budgets in September after public hearings. Although the cities have increased budgets for the new fiscal year, that increase did not necessarily translate to a shift in these cities’ tax rates.
Southlake increases city’s homestead exemption
For the past 15 years, the city of Southlake’s tax rate remained flat at $0.462 per $100 of assessed property value, and fiscal year 2017-18 is no different. Residents could, however, notice a tax increase as property values continue to rise. To offset the increasing home values, Southlake is increasing the homestead exemption to the maximum value allowed by the Texas comptroller’s office of 20 percent, up from 16 percent.
“The average appraised home value is right at $662,000, and with the 20 percent homestead exemption, that reduces our taxable value right at $132,400 for that average home, which is equivalent to a 9.25-cent tax rate reduction,” Chief Financial Officer Sharen Jackson said at the Sept. 5 city council meeting.
She said this translates to a difference from $0.462 to $0.3696 per $100 of assessed property value for eligible property owners.
“For a total homestead exemption of eligible properties, that’s about a $5 million reduction in the property tax the city would collect,” Jackson said.
Jackson also said no new debt is planned for 2018, and that the city continues to be aggressive in paying off existing debt.
Southlake’s budget also reflects discussions among council and city staff members to address challenges in recruiting and retaining public service employees, including fire and police personnel for the city. During these discussions, a suggestion was made to modify compensation for police and fire employees to the 80th percentile of the current market.
“It’s an adjustment that will cost $272,191,” Jackson said.
She pointed out, however, that vacancies in these departments mean increased overtime bills for the city. Jackson said the Southlake Fire Department anticipates spending $425,000 in increased overtime costs, and the Southlake Police Department expects it will spend an additional $55,000 paying for overtime for its employees.
The council decided to approve this suggestion, bringing the expenditures for the general fund up to more than $38 million and the total budget to more than $97 million.
Colleyville increases city’s public safety budget
This fiscal year, Colleyville residents could notice an increase in what they are paying in taxes because of increasing home values, although the city has decreased the tax rate.
Strategic Services Manager Adrienne Lothery said lowering the tax rate was important to City Council.
In response to recent appraisals by the Tarrant Appraisal District, Colleyville has decreased its tax rate from $0.33913 to 0.33834 per $100 of assessed property value.
“While we’re dropping the tax rate, the average property value in Colleyville is going up all the way to $500,000, so that’s a big jump for Colleyville property owners,” Lothery said. “Our council’s made it a priority to drop the rate as much as we can so [property owners are] not experiencing the full effect of what that could be.”
This year’s total city budget is proposed to raise more revenue from property taxes from fiscal year 2017 by almost $661,000.
With that revenue, Colleyville is reinvesting into the general fund and increasing its expenses in public safety services to 43.1 percent of the budget. This allows the city to stay competitive with employee compensation—specifically for police and fire services.
“In the fiscal year ’18 proposed budget, we’ve proposed over $600,000 in funding … to take everybody to where they should be to be market competitive,” Lothery said. “That’s a really big investment on behalf of the council.”
She said sometimes councils will try to gradually adjust compensation rates for police and fire departments to that market level, but as the market changes each year, a city can fall behind again if it does not adjust those rates at one time.
With the compensation rates approved, Lothery said 43 cents of every dollar will go to public safety.
Lothery said the salary increases and the city’s strategy of issuing no new debt is what city staff members are most proud of.
“Either between the money we currently have on hand or the revenue that we conservatively project will be coming in over the next five years, all of the projects in our [capital improvement plan] are paid for,” she said. “That’s a huge deal.”
Grapevine focuses on maintaining city services
Because of increasing property values, some Grapevine residents could pay slightly more in taxes than they did last year, even while the tax rate remains flat.
“Because the proposed tax rate of 0.289271 exceeds the effective rate of 0.270961, the law requires that the City Council hold two public hearings on the proposal,” Mayor William D. Tate said during a Sept. 8 council meeting. “In other words, our actual tax rate remains the same, but because of the increase in valuations, the effective tax rate triggers this.”
Chief Financial Officer Greg Jordan said the city has increased its overall budget and maintained the tax rate, but due to the increased net taxable value for homes in Grapevine, the tax bill on the average Grapevine home will increase from $629 to $692 a year.
“This year [the tax rate] remained flat because sales tax was declining,” Jordan said. “It was just something we were forced to do. But it’s always been a priority to reduce the tax burden on the citizens and the community. And it’s reflected when we compared them with our other cities, too, because we have the lowest rates among anybody in the area.”
He said the increase in the tax bill comes to about the price of a cup of coffee a month.
“Fortunately, we have a strong tax base that’s allowed us to [lower the tax rate] through sales tax, but sales tax is changing,” Jordan said.
The city of Grapevine has placed an emphasis on projects pertaining to residents’ quality of life through its capital improvement plan projects—projects Jordan said Grapevine residents should be able to see progress on relatively quickly. The budget this year has allowed the city to pay for capital improvement plan projects through fund transfers to decrease the city’s cost of borrowing.
“We can really add to the community and do the really nice things that other cities don’t do, like having the backlit street signs, having a dog park, having a lot of the park trails. ... We fund a lot of those types of programs through this,” Jordan said.