The 3.5% cap rule was approved as part of Senate Bill 2, which was signed into law by Gov. Greg Abbott in June 2019.
State law permits the waiver when a natural disaster declaration has been put into place, City Manager Dan Johnson said at a Aug. 3 council meeting. The objective is to help municipalities restore revenue after a period of economic strain, such as the COVID-19 pandemic, by increasing the tax rate by no more than 8%, he added.
While the option is now available to future councils, there are no plans to waive the cap for the upcoming fiscal year, Johnson said. The proposed tax rate that is scheduled for approval Aug. 17 is consistent with this year’s rate of $0.625160 per $100 valuation.
The city is predicting a decline in revenue over the next two years, Johnson said. Therefore, it is important to arm future councils with the ability to raise the property tax rate up to 8% without citizen approval if needed, Johnson said.
“I’m excited about the fact that we are doing a balanced budget this year and not raising a tax rate,” Mayor Paul Voelker said. “This action is important in the context of local control so that next year’s council and the year after that’s council has all the options on the table. I’m hoping this is not needed at all.”
The waiver will expire after fiscal year 2022-23, according to council documents.
