The city of Magnolia approved a $2.7 million budget for fiscal year 2014–15 that allows for a reduction in the rollback tax rate and significant increase in overall property valuation over last year.

"The budget is a little bit larger than last year, and it is conservative as is [city] council," Magnolia City Administrator Paul Mendes said.

The rollback tax rate provides the Montgomery County tax assessor-collector's office with tax revenue collected from property owners based on the amount the city spent the previous year as well as debt service and an 8 percent increase for operations in the 2014–2015 fiscal year, according to city documents.

The new budget includes an estimated 3.3 percent rollback tax rate reduction from $.4786 per $100 valuation in 2013–14 to $.4629 per $100 valuation for 2014–15. In addition, the budget will raise more revenue from property taxes than the 2013–14 fiscal year by an estimated $71,000, or 10.5 percent, due to an increase in the city's overall property valuation.

Councilmember Richard Carby said the city's overall property valuation for 2012–2013 was $142 million and rose to $154 million in 2013–2014. For 2014–2015, the city's overall property valuation is estimated at $162 million.

Carby said because of the increase in property valuations in Magnolia, which will lead to more property tax revenue, the council was able to decrease its property tax rate for the 2014–15 fiscal year without losing any revenue.

With a 10.83 percent increase over last year, the $2.7 million budget includes revenues of $2 million for city hall, $540,750 for municipal court and administration, $147,951 for intra-fund transfers and $8,250 for the police department.

"We added about 100 more homes [in Magnolia] this year," Mendes said. "For every $1 we get from property taxes, we have to come up with $4 from the franchise sales tax, building permits and other sources [to support the budget]."

The budget also includes expenditures of $2.5 million for various departments, including $1 million for the police department, $620,000 for city hall and administration and $366,000 for the municipal court. An estimated $250,000 is expected to be set aside for reserves by the end of September due to City Council's financial planning, Mendes said.

For more details on the city of Magnolia's budget, see Community Impact Newspaper's Oct. 2 edition.