Council’s vote does not mean the tax rate is established; the vote establishing the property tax rate will be done Sept. 13, City Manager Morad Kabiri said.
The tax rate has been dropping the past few years, reaching a 40-year low of $0.487314 this fiscal year. Friendswood staff came up with its proposed FY 2021-22 budget based off the tax rate remaining the same, said Katina Hampton, director of administrative services and finance.
The budget includes $125.4 million in projected revenue and $123 million in projected expenses. About 40%, or $50.8 million, of budgeted revenue is fund balance and retained earnings that will be used to address capital projects related to voter-approved bonds. About 57%, or $70.3 million, of budgeted expenses are for capital improvement projects, Hampton said.
Property tax revenue makes up about 17% of the budget at $21.1 million, and sales tax makes up about 9% at $10.8 million, Hampton said.
Based on budget projections, Friendswood officials expect to bring in about $1.3 million to $1.5 million more property tax revenue in fiscal year 2021-22. Sales tax revenue expected to increase an expected $762,000 compared to what was budgeted at the beginning of FY 2020-21, Hampton said.
Kabiri said over the last 12 years, the city has generally adopted the no-new-revenue tax rate or less. The no-new-revenue rate is the property tax rate the city would establish to not bring in any additional income from property taxes.
Only in years when voters approved bonds for the city to issue debt to take on larger projects did the city’s property tax rate exceed the no-new-revenue rate, Kabiri said.
Council Member John Scott said it was remarkable how a city of Friendswood’s size has not taken on new property tax revenue for so many years.
“That is impressive,” he said.
City Council will host a public hearing on the budget Aug. 30.
