To offset declining sales tax revenue in 2016 and contribute more to reserves, the city of Humble approved a 1-cent property tax hike to 21 cents per $100,000 valuation on Sept. 22. The municipality also approved its $76 million budget in September.

It was the first change in the property tax rate since 2005, city officials said.

In April, heavy flooding across the Lake Houston area, which is situated near the West Fork San Jacinto River, contributed to a drop of about $300,000 in sales tax revenue, Humble City Manager Darrell Boeske said.

Sales did not recover for about a week during the Tax Day floods. Two hotels were damaged and will not reopen until 2017, exacerbating the decline, he said.

“Our property tax is the only thing that’s stable that we have coming in every year,” Humble Mayor Merle Aaron said. “Everything else fluctuates by sales. We do live by sales tax in the city of Humble.”

The tax hike was necessary to prepare for other possible revenue losses, Boeske said. Humble receives a 1-cent rebate from its yearly 2-cent per $100 valuation payment to the Metropolitan Transit Authority of Harris County, which can be used to cover transportation-related expenses.

The contract for the rebate expires in 2025 and could cause a $6 million deficit in the budget if the rebate is not continued, he said. The increased property tax revenue will allow the city to contribute more to its reserves and prepare for the possibility of a deficit.

However, the future of the property tax rate will be determined by sales tax growth, as a 2 percent growth in sales tax revenue this year would outpace the 1-cent property tax increase, Boeske said.

He said he expects revenue growth due to new retailers—such as Costco and Dick’s Sporting Goods, which will open in October, and Main Event which is projected in 2017.

“You can anticipate that every year we’re going to have to give [the property tax rate] a strong look to see where sales tax is in relation to the entire economy of our city,” he said. “Being this year we’re down, we’re going to hope that’s not a continuing trend, especially since we have some major big-box retailers that are newly opened.”

The 2016-17 budget includes more than $19 million in capital improvement projects.

Two major transportation projects—the $4.3 million four-lane expansion of the north-south portion of Townsen Boulevard west of Hwy. 59 and the $6.2 million 2016 Concrete Pavement Improvement Program—are funded within the budget.

The budget also features $1.2 million in funding for the new Senior Activity Center and $275,000 for a new building for the Parks Department. Boeske said he expects to select an architecture firm to design the Senior Activity Center before the end of September, and the center to be completed before the end of 2017.