With new projects, community amenities and a conservative outlook for the next fiscal year, The Woodlands Township approved a $118 million budget Aug. 23. The township held budget workshops in mid-August to determine the property tax rate as well as expenditures for the upcoming fiscal year.
As The Woodlands approaches residential build-out, township staff said the area is projecting a slowdown in property tax revenue. The township saw an increase in property tax revenue from the past year, largely due to new properties; however, Monique Sharp, assistant general manager of finance and administration, said overall property valuations have decreased by 0.2 percent in the past year.
“That is the first time I have seen a negative revaluation in the 25 years that I have been doing this, so that was a pretty significant thing. It’s not hugely negative, but it is negative,” Sharp said. “We are now leveling out, and in terms of residential growth we only have a few units left out in the Village of Creekside Park and then we will be built out residentially.”
However, while property tax revenue has slowed, the township approved a tax rate of
23 cents per $100 valuation, the same as the previous two years and still lower than the township’s all-time high of 32.8 cents in 2010, Sharp said. The tax rate is also below the effective tax rate of 23.1 cents—which is the rate the township would have to pass to collect enough taxes to match last year’s overall revenue.
Sharp said the township’s situation this year is similar to last year in terms of conservative forecasting in the economy.
“The board actually set the tax rate below the effective tax rate in 2017. We talked a lot about this in the budget workshop, but the board in retrospect now made a very wise decision to hold the rate at 23 cents due to [an] uncertain economic climate,” Sharp said. “We’ve seen some of the challenges that we’re going to have moving forward.”
This year, the township has committed funds to a number of community amenity projects, including park improvements, purchases for city services and future city planning.
The township approved $3.4 million in funding for community amenities, including new docks at Northshore Park, a dog park area in Bear Branch Park, and nearly $950,000 in improvements for Rob Fleming Park, which will come from a parks project reserve fund, according to township budget documents.
The township will also add to its incorporation reserve fund, established in FY 2016-17 to help with expenses incurred with planning for the city to incorporate. The township has also collapsed the existing road and bridge fund into the reserve, giving the township a total of $4.8 million for future incorporation costs to date.
Tax revenue shifts
Accounting for 42 percent of revenue, sales and use tax remains the highest source of income for the township, Sharp said. Conservatively, the township is projecting a sales tax revenue total of $51.9 million, which forecasts a 5.5 percent decrease from last year.
This is also a repeat of last year’s negative forecasting. In FY 2016-17, the township budgeted to bring in only $49.2 million in sales tax revenue, but it is expected to bring in more than $52 million by the end of this fiscal year.
“We are being conservative in what we are expecting in our sales and use tax growth,” Sharp said.
Board members also expressed some concern for a slowdown in sales tax as the market continues to recover from the economic downturn in late 2014 and new competition from the surrounding area and online retailers like Amazon.
“There’s two things I think that are impacting retail sales: Amazon, I think, being one of the larger ones and … the additional retail that has been constructed outside of our taxing geography,” township Chairman Gordy Bunch said. “I think as we’re looking at our five-year plan, we have to be hypersensitive to a lot of this that is outside of our control. We’re going to have to assume the worst like we did last year.”