The nearly final League City budget for fiscal year 2019-20 has undergone some minor changes since the city manager revealed it in July, including a slight projected property tax rate decrease.
As of late August, the estimated property tax rate had dropped from $0.55 per $100 valuation to $0.548581 per $100 valuation.
The existing property tax rate is $0.5638. League City has seen steady property tax rate decreases over the last decade, according to city data. The tax rate in 2010 was $0.63 per $100 valuation.
City Manager John Baumgartner said the decrease is mainly because home values are increasing faster than inflation, meaning the city can tax residents at a lower rate and still make as much property tax revenue.
Additionally, new growth allows for a bigger tax base, contributing to decreasing property tax rates. League City’s taxable assessed value has reached $8.72 billion, about $200.79 million of which is entirely new growth since last year, said Angie Steelman, budget and project management director.
Sales tax revenue also helps lower property tax rates. While League City did not see sales tax revenue growth this year on par with previous years, the $19.6 million staff expects to collect offsets the cost on homeowners, Steelman said.
“New growth and sales tax helps take some of that burden off property tax,” she said.
Baumgartner said I-45 construction, especially the monthslong intersection work at FM 646, affected sales tax revenue.
“It did not grow as fast as we had predicted,” he said.
Still, League City expects to collect about $20.47 million in sales tax revenue in FY 2019-20.
The proposed FY 2019-20 operating budget is $140.41 million, and the proposed capital budget is $110.57 million for a total of $251.22 million. This is an 18.38% increase compared to the FY 2018-19 budget of $212.52 million, which includes $133.19 million for operating expenses and $79.33 million for capital projects.
The city has budgeted to hire 21.25 full-time employees, which contributes to much of the operating budget’s growth over last year. The city wants to hire two full-time paramedics, a drainage engineer, two park maintenance workers and other roles.
Additionally, merit-based and cost-of-living pay increases and rising insurance costs contributed to the increased operational budget.
In July, the city proposed a $141.37 million operating budget, but the League City City Council and staff worked throughout the summer to cut almost $1 million in costs to save money.
“We’re a little tighter this year than we’ve been in years past,” Baumgartner said. “There are always more needs than there are dollars.”
One of the biggest budget changes is a 39.38% increase in the capital budget. Much of the increase is due to $150 million worth of drainage and transportation projects the city will undertake over the next several years after voters in May overwhelmingly approved bonds for the work. League City will also soon start paying for infrastructure to secure more water from Houston as the city continues to grow, Baumgartner said.
Voters also approved a sales tax rate increase of 0.25 percentage points to the maximum of 8.25%, which goes into effect Oct. 1. The city expects to collect an additional $3.4 million in sales tax revenue from the increase, and it will all be used to offset costs for drainage and transportation projects, city officials said.
“Our budget should reflect the values, the goals … of the community at large,” Baumgartner said. “We’re gonna focus on drainage and mobility followed by water supply as it relates to projects.”
The property tax rate will not be official until the council votes on it Oct. 8. The council will vote Sept. 10 to officially adopt the FY 2019-20 budget.
