Monday, September 16, 2024
SPRINGTOWN — Springtown City Council unanimously approved raising the city’s tax rate by about 4 cents last week.
Earlier this month, city staff briefed the council on an unexpected issue with the state’s Truth in Taxation calculation process stemming from the council’s decision in 2022 to approve a tax freeze for homesteaders who are 65 or older and/or disabled. Qualifying for the freeze means the amount of property tax a person pays to the city of Springtown will not increase for the rest of the time they own that house. For the city, this results in a loss in revenue that must be made up by nonqualifying taxpayers. Instead of showing that loss, the state’s calculations incorrectly removed $58 million from the tax roll.
Therefore, the comptroller’s form called for a higher than usual no-new-revenue rate and voter-approval rate, though these labels don’t accurately describe the values the rates represent. The so-called no-new-revenue rate of 50.6589 cents per $100 valuation would produce more revenue than the current year, and the voter-approval tax rate of 56.5615 cents per $100 valuation was above the usual threshold for triggering an election.
Ultimately, the council adopted the no-new-revenue rate for the new fiscal year, which is more than the 2023-24 rate of 46.6087 cents per $100 valuation, at its Aug. 22 meeting. Springtown Assistant City Administrator Christina Derr confirmed that the impact on the average taxpayer, which is described as owning a home with about a $238,000 taxable value, will see their tax bills go up by about $96.
The last time the rate was increased was for tax year 2017 and the 2017-18 budget, Derr said. City Administrator David Miller started his job in Springtown around that time and said the tax rate used to be about 62 cents per $100, and the city council has been able to lower it over time while providing “better, more efficient services than ever in the past.”
Miller specified that neither city staff nor the council is responsible for proposing a higher tax rate, but it is a result of the way Texas’ tax law is written.
“It's odd; it's weird; it is the most convoluted Truth in Taxation thing I've ever seen,” Miller said during the Aug. 22 meeting. “But the reality of it is that is your not-to-exceed amount.”
This issue with the state’s tax law is only expected to have an impact this year. Next year, the values of the properties that qualify for the freeze will return to the tax roll at a lesser rate, and that may put Springtown in a position to lower the tax rate next year, Miller said.
“We're not trying to raise the tax rate because we need more money,” he said during the meeting. “Financially, we’re very strong. The tax rate is being raised because the comptroller gave us no other option on how to figure the formula. … Rest assured that next year, those will roll back into the tax roll, and we'll reevaluate it next year.”
The higher rate allows for the city to pay cash for some purchases — like a police patrol vehicle, two trucks for the public works department, a Kubota tractor with a Batwing mower and side-arm, and an additional animal control vehicle — as opposed to financing them.
“If you finance any of that, you're looking at an interest rate anywhere from 5-7%,” Miller said. “If you choose to finance it, we will bid it out; we will get the best interest rate we can get. But the reality is, now is not a good time to be financing anything.”
Springtown’s 2024-25 budget includes:
Miller told the council the theme for this year’s budget cycle is “honoring the past, treasuring the present and shaping the future.” The city administrator interpreted this mantra as providing services to residents now, planning to capitalize on future growth and never forgetting Springtown’s history and identity.
“One of the things I hear all the time from citizens is, ‘We're growing so much (that) we're going to lose sight of who we are,’” Miller said. “We don't want to lose sight of who we are, and we will never try to lose sight of who we are. We are Springtown, Texas. We always have been. We always will be. Does it look differently than it did 10 years ago, 15 years ago, 30 years ago? Yes. What's the benefit to that? You're getting better streets; you're getting better services. It all fits hand-in-hand.”
Miller and some council members praised the hard work of Springtown employees to assemble the budget.
“We’ve had workshops; the city staff has put in many hours, so what y’all see up here is a result of lots and lots and lots of time spent,” Mayor Pro Tem Ted Martinez said during the meeting. “We have been through every question imaginable, I think we have, so what we’ve got proposed is a culmination of a lot of work. We’re all citizens here (referring to the council), every single one of us, and so we’ve got a big stake in this also.”
“We’ll pay the same amount,” council member Michele Chandler Kelley added.
Along with the tax rate, the council unanimously adopted the budget for the new fiscal year.
