The Woodlands Township has adopted its fiscal year 2014 budget, one that lowers the community's property tax rate for the fourth consecutive year while establishing a reserve fund designed to pay for future improvements and renovations. The budget also continues the trend of the township lessening its reliance on property taxes to pay for community services, a trend that has been enabled in part by significant gains in sales tax revenue. According to the township, sales tax revenue has increased by a total of $18.6 million in the past three years.
The township board of directors approved a FY 2014 property tax rate of 29.4 cents per $100 of property valuation, a 2.33-cent decrease from last year's rate of 31.73 cents. Based on The Woodlands' average home value of $332,600, the average property tax for 2014 will be $977.84, $77.50 less than in 2013.
"We knew that sales tax and hotel [occupancy] tax growth has been very strong over the past couple of years, so we went in with the goal of lowering the tax rate," said Monique Sharp, assistant general manager for financial services for the township. "[The township board] didn't want us to look only at maintaining service levels, but enhancing service levels where we could."
Capital Reserve Fund
This year's budget establishes regular funding for the capital reserve fund with an initial allocation of $3.2 million designed to pay for future renovations of the township's assets. The capital reserve fund was established to set aside money for future renovations of the township's assets.
In February, the township completed an assessment of its assets, which include the community's parks, pathways, fire stations and fire protection equipment. The report revealed the township owns about $230 million in assets.
"We know that over time, those assets have to be replaced," Sharp said. "We wanted to make sure we had funds available that we were setting aside each year based on the lives of those assets."
Sharp said rather than identify specific parks, swimming pools or other amenities each year for renovations, the reserve study set aside replacement funds for classes of assets.
The Parks and Recreation staff will then recommend specific projects during each year's budgeting process.
Two of the most recent projects the township has funded have been the renovations of Sawmill and Shadowbend parks. In both cases, the township budgeted about $500,000 for each park's renovation. However, engineering studies and proposals by township staff revealed the renovations would likely cost more than $1 million each.
"We asked that [township staff] go back and increase those park renovations up to at least $1 million," director Gordy Bunch said. "The board has increased all future park renovation expense expectations to $1 million as experience has shown us there has been no viable park renovation plan for $500,000."
Bunch said the township could also be facing a major renovation to a fire station in the next 10 years, as well as needing to purchase new firefighting equipment.
Board chairman Bruce Tough said although the township has always had capital reserve, the fund only received money from the year's excess revenues.
"Under the current funding, the capital reserve fund was not going to be maintained at a sufficient level," Tough said. "Now the board is looking to fund the capital reserve fund through a formula and maintain it at a percent that will have long-term benefits for the residents."
Revenue increases
The township can now allocate funding to the capital reserve fund annually because of substantial increases in tax revenue over the past several years, Bunch said.
For FY 2014, the township is expecting to earn more than $47 million in sales tax revenue.
Meanwhile, the township's hotel occupancy tax revenue has also substantially increased from $3.6 million in 2010 to a projected $6.6 million in 2013. The township is expected to bring in $6.9 million in hotel occupancy tax revenue in 2014.
Sharp said increases in sales and hotel tax revenue have allowed the township to pass on savings to The Woodlands residents through lowered property tax rates. The 2.33-cent decrease in the property tax rate is the largest decrease since the township's inception in 2008.
"The community really has benefited from the economic development, particularly in terms of the sales tax that is generated," she said.
Although The Woodlands is known for its retail shopping and dining, Sharp said half of the community's sales tax revenue comes from other industries, such as oil and gas, transportation, communication, and manufacturing.
"We have seen an absolute explosion in those," Sharp said. "A lot is from oil and gas extraction. Even though the extraction is taking place in, say, South Texas, the transaction is taking place here."
Bunch said he expects the revenue increases to continue over the next several years.
"With all the new construction, the Hughes Landing development, we have not maxed out," he said. "Through the redevelopment of housing and redevelopment of commercial properties and hotel expansions, we're kind of at the middle of the mountain."
Funding transportation
In 2012, the Federal Transit Authority designated The Woodlands and Conroe as a new Urbanized Area. The designation means the township will be responsible for operating the four park and rides starting next year. The Brazos Transit District currently operates the park and rides.
Tough said The Woodlands could be facing growing pains as development picks up throughout Town Center. To prepare for costs that will result from the new designation, he said, the township established a new transportation fund with an initial infusion of about $1.2 million.
"We're looking at unprecedented growth in Town Center," he said. "Mobility, road construction, all of these things are hitting us at one time."
Tough said the township is looking into the possibility of owning its park and ride buses, as well as improving parking in Town Center.
"We are ahead of this and are looking at it," he said. "We will come back with some proposals."
