Earlier this summer, staff built a budget based on a projected $297 million loss in citywide property valuation; however, the estimate available at the time represented only 33% of values in dispute, which painted an incomplete picture of where the city would land, Finance Director Keith Dagen told City Council at a Oct. 19 meeting.
The certified tax roll now shows that property in Richardson is valued at a cumulative $17.3 billion, which is up $1.1 billion year over year and will yield $6.8 million in property tax revenue for the city.
Of that, $4.2 million will go toward the general fund, while the remainder will be used to pay down debts. Staff is proposing that the revenue overage be evenly split between employee compensation increases and reserves for future economic uncertainties related to COVID-19.
Values in dispute are at a historic high, Dagen said. Of Richardson’s total property valuation, $681 million was in dispute, which is up significantly from the $227 million in dispute in fiscal year 2019-20.
Certified values were delayed this year due to the pandemic. This means that during budget planning, the city was unable to accurately calculate its growth as it relates to limitations outlined in Senate Bill 2, Dagen said.
SB 2, which was signed by Gov. Greg Abbott in 2019, limits funding for municipalities by requiring voters to sign off on property tax revenue growth exceeding 3.5%. Growth from new construction, which made up a good deal of this year’s value increase in Richardson, is exempt from this calculation, Dagen said.
For comparison purposes, the city reviewed the SB 2 calculations and found that the final certified value yielded a voter approval property tax rate that was slightly below the adopted tax rate, by $0.00013, and equates to $22,487 in total city tax revenue, according to Dagen.
The outcome of this year's certified tax roll was favorable for Richardson; however, Dagen warned that the city will likely see a decline in values next year as the effects of the COVID-19 pandemic set in. This year’s values were finalized Jan. 1 and were not influenced by the pandemic.
“January 1, 2021 may be a very different picture especially for our commercial properties,” he said.