Buda budget planning driven by growth

"We're suffering from success," Williams said. "Our assessed values are going up and it's putting us in a position where our effective rates are going lower."

The city's assessed values have increased $120 million over the past year, from about $710 million in 2012 to almost $830 million in 2013, Williams said. As those values rise, the effective rate, the tax rate that would generate the same revenue as the previous year, goes down.

If City Council adopts the proposed tax rate of 25.17 cents, Buda's tax rate will be less than half of the rates in Kyle and San Marcos.

Williams said steadily increasing property values have allowed the city to maintain rates, or as is proposed in the 2013–14 budget, reduce them.

"We're in a good position where we're located," Williams said. "We're having good, strong growth."

Buda Mayor Todd Ruge said the city may also consider increasing rates slightly in order to plan for projects that will be addressed in the future.

According to the city's budget documents, Buda officials expect to collect nearly three times as much sales tax as property tax in the next fiscal year. In Kyle, sales tax is expected to outpace property tax for the first time in the city's history this year, but only by a 3 percent margin.

San Marcos, which includes an extra half-cent in its sales tax, is also expecting to collect about three times as much from sales as it is from property.

Ruge said the city has historically been very dependent on sales tax. When Cabela's opened in 2005, the population was only about 3,000 to 4,000, he said. Since then, the city has focused on building its property tax base, he said.

"We've done a good job of bringing in more housing and doing really strategic annexations, so we're not as dependent on sales tax as we once were," Ruge said.

The largest expense from the general fund in Buda's proposed budget is $2.6 million, which will go toward re-pavement of the streets in the Bonita Vista neighborhood west of I-35.

"Basically the whole neighborhood is going to get a repave," Ruge said. "Some parts of it are going to be more intense than others."

The proposed budget also calls for 4 and 2-percent increases in water and wastewater rates, respectively. According to a presentation at city council's meeting Aug. 6, customers who use 5,000 gallons per month would see their water bills increase from about $68 per month to about $70 per month.

The proposed budget also includes the addition of one full-time employee to the city's administration. Ruge said that employee will be added to the billing department based on the recommendation of an audit conducted last year.