Proposed Bellaire budget calls for 8% property tax increase

Bellaire residents will vote on Nov. 5, 2019, to elect a mayor and three councilmembers.

Bellaire residents will vote on Nov. 5, 2019, to elect a mayor and three councilmembers.

A proposed budget for FY 2020 in Bellaire calls for an 8% increase in property taxes from existing properties, according to a presentation given by City Manager Paul Hofmann to the city council at its July 15 meeting.

“According to this budget, we’ll end fiscal 20 with a healthy reserve, but we’ll immediately start eroding away that reserve into fiscals 21, 22, 23 and 24. We won’t be balanced in future years without that [increase],” Hofmann said.

The tax increase is planned to help prepare the city’s funding in advance of future limits to property tax increases that come as a result of state legislation passed earlier this year. Starting next year, tax increases beyond 3.5% can be challenged by a petition calling for an election, per the new law.

Even with the 8% property tax increase, city staff’s fiscal forecast shows its 60-day reserve requirements would drop by $440,000 by FY 2024. If the increase was passed with the new state standard of 3.5% instead, the drop was projected to be about $3.61 million. The fund reserve for FY 2019 was about $3.47 million.

If the 8% increase is approved by the council, the average Bellaire homeowner without homestead or senior exemptions is projected to pay $4,272 in property taxes annually, according to city estimates.

“I think I recognize I’m asking you to do a difficult thing,” Hofmann said to the council. “I’m asking you to go to the current max on a property tax rate increase for fiscal '20. … I’m also asking you to make that decision in light of what we think will happen in fiscal 24, and I’m going to do that fully recognizing that none of you will probably be on the city council in fiscal 24, but I am convinced that it is the fiscally correct thing for us to do.”

The budget also proposes an 8% increase in water and wastewater rates, a 3.9% increase in general fund base operating expenditures, a 2% increase in enterprise fund base operating expenditures and a 46% increase from the projected FY 2019 ending balance.

The proposed budget would provide ending balances that exceed the city’s 60-day reserve by about $1.7 million and is focused on long-term goals like the future state of the city’s general and enterprise fund and the possibility of new large-scale bond projects.

“This budget provides almost $1 million in already existing funds for us to get a jump start on the design of projects to be funded in a future bond program,” Hofmann said.

A series of public hearings and budget workshops regarding the proposed budget and tax increase will take place before any action is taken, with Oct. 21 set as the date when the tax increase could be approved by the council.
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