Facing budget shortfall, League City officials still plan to lower tax rate

Despite the effects of the coronavirus pandemic on local businesses and government, League City still plans to lower the property tax rate in fiscal year 2020-21. (Screenshot courtesy League City)
Despite the effects of the coronavirus pandemic on local businesses and government, League City still plans to lower the property tax rate in fiscal year 2020-21. (Screenshot courtesy League City)

Despite the effects of the coronavirus pandemic on local businesses and government, League City still plans to lower the property tax rate in fiscal year 2020-21. (Screenshot courtesy League City)

Despite the effects of the coronavirus pandemic on local businesses and the government, League City still plans to lower the property tax rate in fiscal year 2020-21, City Manager John Baumgartner said.

During a League City Regional Chamber of Commerce webinar June 3, Baumgartner and Mayor Pat Hallisey spoke about where the city is at in its budgeting process. The new fiscal year begins Oct. 1.

COVID-19 forced several businesses to close temporarily in the spring, which put a damper on sales tax revenue. League City made early estimates on how much sales tax revenue they might lose out on compared to what was budgeted, and while the city saw more than expected in March, revenue was still lower than budgeted, Baumgartner said.

April was the first full month of business closures, and sales tax revenue data for the month will be released by the state comptroller around June 10. At that time, city officials will have a better idea of where sales tax revenue stands compared to what was budgeted and what was projected after the pandemic began, Baumgartner said.

Before the pandemic hit, League City was bringing in about $100,000 more in sales tax revenue than budgeted, which has softened the blow of lower revenue during the outbreak, he said.

“We built a little bit of a cushion," Baumgartner said.

That said, city officials believe revenue will be about $1.8 million to $2 million less than budgeted for FY 2019-20. The city is considering ways to save money to make up the shortfall, Baumgartner said.

Based on the city's projections, businesses will return to normal, full-capacity operations by September.

“That’s a pretty bold projection," Baumgartner said.

If that does not happen and revenue stays low, the city will "struggle with what we cut," he said.

Baumgartner and Hallisey remain said they optimistic about FY 2020-21. Officials plan to pass a relatively flat budget at the effective tax rate, which will mean a property tax rate decrease, Baumgartner said.

For the past 15 years, League City has maintained a stable effective tax rate by decreasing property tax rates, increasing homestead exemptions from 10%-20% and being conservative and effective while budgeting, he said.

Hallisey said about 25 years ago, the city dropped property tax rates by a nickel and has kept that trend going since then.

"It has continued on up through the 2020 outlook," he said.

"[I'm] pretty proud of our record," Baumgartner added.

Hallisey said the budget will concentrate on what it has for the past two years: drainage and mobility, which he said are the two issues residents care about most. Officials are still working through the related bond projects voters overwhelmingly passed just over a year ago, but such projects take time, Hallisey said.

"Some of the bond issue money has been slow to come about," he said.

Additionally, the FY 2020-21 budget will focus on the city's capital improvement program and on making utility billing more effective and streamlined, Hallisey and Baumgartner said. Besides that, Hallisey hopes to eliminate as much of the fluff in the budget as possible, he said.
By Jake Magee
Jake Magee has been a print journalist for several years, covering numerous beats including city government, education, business and more. Starting off at a daily newspaper in southern Wisconsin, Magee covered two small cities before being promoted to covering city government in the heart of newspaper's coverage area. He moved to Houston in mid-2018 to be the editor for and launch the Bay Area edition of Community Impact Newspaper.



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