As it turns out, the tax rate will likely be even lower than originally proposed, a city official said.
On Sept. 14, council voted 6-1 to pass a FY 2020-21 budget with $96.32 million in revenue and $95.76 million in expenses. Council Member John Scott was the lone member opposed.
However, the vote to pass the proposed property tax rate of $0.497314 per $100 valuation failed, 4-3; the vote to pass the tax rate needed a supermajority, or at least five council members in favor, Public Information Officer Jeff Newpher said.
Due to the failed vote, under state law, the FY 2020-21 property tax rate will default to the no-new-revenue rate of $0.487314 unless council has a special meeting before Oct. 1 to establish a different tax rate, which is unlikely to happen, Newpher said.
"There’s no meeting planned," he said.
The no-new-revenue rate is what Friendswood's property tax rate would have to be for the city to collect the same amount of property tax revenue in FY 2020-21 as it did in FY 2019-20. Cities use the no-new-revenue rate as a starting point and goal to determine what the actual property tax rate will be, Newpher said.
In Friendswood, the city took the no-new-revenue rate and added $0.01 to reach the proposed rate of $0.497314 per $100 valuation. The extra $0.01 was for debt the city must pay due to bonds related to public works, public safety and drainage, which voters approved last November, Newpher said.
The $0.497314 rate was not low enough for at least three council members, even though it is more than $0.02 lower than the existing rate of $0.521439.
Scott, who was among those to vote against the tax rate, said the city has access to an extra $775,000 in FY 2019-20 budget revenue that could be used to lower the FY 2020-21 tax rate further, which would be helpful for residents suffering financially due to COVID-19.
City Manager Morad Kabiri said such an action would be possible only by amending the city's budget policies.
Newpher implied the $0.487314 tax rate is good news for residents. It will be a historically low rate for the city, he said.
"They’re going to have a $0.4873 tax rate—even lower than what was thought going into the meeting,” Newpher said. "We are lowering taxes again.”
Because the tax rate will likely drop, the FY 2020-21 budget will be amended as well, but that is normal, Newpher said: The budget is amended monthly due to changes in revenue and expenses.
Regardless of what budget changes happen, budget expenses will be equal to or lower than revenue, as they were when the budget was passed Sept. 14, he said.
