The preliminary rate was set at $0.4990 per $100 valuation, which is the highest rate council could approve without putting it before voters. The FY 2023-24 tax rate is set at $0.4805 per $100 valuation.
The motion by City Council does not establish a tax rate, and the preliminary rate can be decreased prior to the final adoption of the budget.
Public hearings are scheduled for Aug. 20 and Sept. 3, with final adoption scheduled for Sept. 3.
What you need to know
During the Aug. 6 meeting, city staff said if the rate of $0.4990 were to be adopted, the average resident would pay an estimated $63.47 more annually. This estimation is based on the 2024 average taxable value of homes at $343,118.
Should council decide to keep the tax rate the same, the annual increase would be an estimated $22.98.
City Council also has the option of selecting a tax rate in between the FY 2023-24 rate and the voter-approval rate.
City staff explained a one-penny difference in the tax rate would equate to around $564,500 in revenue for the city.
Finance Director James Walters said the Disabled Veteran Homestead Exemption includes a total taxable value of just under $1 billion. For the city, this means an estimated $4.87 million in tax revenue is forgone due to exemptions.
A staff presentation showed 21% of homesteads have a DVHS exemption, and 52% of homesteads have some form of disabled veteran exemption.
On July 16, City Council approved a resolution to support state legislation that would establish a dedicated funding mechanism for the exemption.
What they’re saying
During Aug. 6 discussion, City Council was split with some members recommending the tax rate stay the same, while other members said a tax rate increase would be necessary to meet the budget proposed by city staff.
Council member Mark Davis said the biggest impact on the city budget is the DVHS exemption. Davis, alongside other council members, said the program is necessary, but legislation is needed to offset some of the revenue lost due to the exemption.
However, Davis suggested not increasing the tax rate and to instead work on trimming areas of the budget.
“I think there is enough wiggle room where we can be productive, and we can take care of our staff without raising the tax rate,” Davis said.
Mayor Pro Tem Tiffany Gibson supported the increase in tax rate, believing it is important not to reduce funding, which could potentially cause issues in future budgets.
“I don’t believe there is another fix right away for this,” she said. “This is the option that we have, unfortunately, based on legislation that is not going to happen overnight, and it is certainly not going to happen next year at this time, I’m sure. ...”
A decision on whether to increase the tax rate or leave it at the FY 2023-24 rate was not voted on during the meeting, and council will continue discussion prior to budget approval.
What’s next?
City Council will revisit the tax rate discussion in future meetings, with the first public hearing held Aug. 20.
The second public hearing and final adoption of the tax rate is scheduled for Sept. 3. Prior to this meeting, council can opt to reduce the preliminary tax rate.
Additional information about the city budget can be found here.
