City Council unanimously approved proposing that rate, called the “not-to-exceed” tax rate, and will use it to prepare the required notice and subsequent hearing publications, according to an Aug. 23 agenda report. The resolution approved by City Council does not mean the 2021 tax rate is adopted; that consideration and adoption will come later during the Sept. 27 meeting.
The tax rate that is eventually adopted may be lower than the rate voted on during the Aug. 23 meeting.
The City Council-approved and -proposed rate matches the city’s voter-approval tax rate, the rate necessary to raise 3.5% more maintenance and operations tax revenue as the year before after taking into account appraisal fluctuations and the debt service component of the tax rate. To raise the tax rate beyond that, the city would have to get the approval of the majority of the city's voters in an upcoming election, per state law.
The proposed not-to-exceed tax rate is lower than the city's current tax rate of $0.294066 per $100 of assessed value, according to agenda documents.
The proposed rate is also lower than the no-new-revenue tax rate, calculated at $0.285941 per $100 of assessed value by the Harris County tax assessor-collector. That rate would allow the city to collect approximately the same amount of revenue it had the year before.
That phenomenon caused questions among the West University Place city council. Council Member Melanie Bell asked why the “not-to-exceed” tax rate was lower than the no-new-revenue rate.
The main cause is a decrease in debt for the city year over year of $912,000, said Katherine DuBose, West University Place's finance director.
“The no-new-revenue [rate] is just one rate," DuBose said during the meeting. "The voter-approval rate separates out our maintenance and operations tax rate and our debt tax rate ... We’re going to have a lower principal and interest for the upcoming year. That has reduced the debt rate. Those two components result in a lower voter-approval rate compared to the no-new-revenue rate.”
Prior to the Sept. 27 meeting, a budget workshop will also take place Sept. 13, and a budget public hearing and tax rate public hearing will take place Sept. 20.