Springtown to adopt new tax rate, budget Aug. 22 - Tri-County Reporter (2024)

By MADELYN EDWARDS

SPRINGTOWN — For the first time in years, the city of Springtown’s tax rate may increase.

Because of an error with the state’s tax rate calculation process, Springtown City Council is considering a rate higher than the current one. The council met Aug. 1 and set the rate-not-exceed at about 4 cents more than the current rate. The council is expected to adopt the final rate at the Aug. 22 meeting. The rate it adopts cannot be more than the not-to-exceed rate.

Tax rates are calculated through the Texas comptroller’s Truth in Taxation form. The calculation process is different this year because the city council approved a tax freeze for homesteaders who are 65 or older and those with disabilities in 2022. Assistant City Administrator and City Secretary Christina Derr said this is the first year the freeze has had an impact in tax rate calculations, and as such, the city was expecting a revenue loss. As a result of a “poorly written section of the tax code,” Derr said the state’s tax rate calculation form shows Springtown will lose about $58 million in property values, but this isn’t actually the case. The state’s system is counting all freeze-qualifying home values as a loss, but in reality, the city will still get tax revenue from these properties, but those taxpayers’ bills are frozen at a certain amount.

“The good news is that this should be a one-time problem because next year, we will have two sets of numbers to calculate a difference,” Derr said during the council meeting.

Because of this miscalculation, the comptroller’s form projected higher tax rates, namely the no-new-revenue rate and the voter-approval rate. The current rate is 46.6087 cents per $100 valuation. Based on the state’s calculations, the no-new-revenue rate is 50.6589 cents per $100 valuation, and the voter-approval rate is 56.5615 cents per $100 valuation.

Typically, the no-new-revenue rate is what is needed to generate the same amount of revenue as the current year, and the voter-approval rate is the maximum the council could adopt without triggering an election. However, the names of these rates are misnomers because of the state’s calculation error. The so-called no-new-revenue rate would produce more revenue than the current year, and the voter-approval tax rate is above the usual threshold for triggering an election.

The current tax rate is enough to fund the city’s budget for the next fiscal year and generate $121,191, or 8.8%, more for the maintenance and operations fund than the current year, Derr said. The no-new-revenue rate, which the council ultimately selected as the not-to-exceed rate, would levy $294,619, or 21.4%, more for the M&O fund than the current year. Lastly, the voter-approval rate (which is currently off the table because of the council’s decision Aug. 1) would have increased M&O revenue by almost 40%.

The city is required to post notices leading up to the adoption of a new tax rate Aug. 22, but Derr said Truth in Taxation is not calling the potential adoption of the not-to-exceed rate an increase, even though that’s what it is. The public notice in The Tri-County Reporter reads, “Springtown is not proposing to increase property taxes for the 2024 tax year.”

“Council, what you're faced with tonight is a byproduct of the Truth in Taxation bill, which is not a clear picture of what's going on with our tax rate,” City Administrator David Miller said during the Aug. 1 council meeting.

Taxpayers who own a home with a taxable value of $238,753 would have a bill of about $1,114.67 with the city’s current rate, Derr said. If the not-to-exceed rate is adopted, that person’s bill would go up by $94.83. Each penny that the tax rate goes up would equate to about $23.88.

An upside to this situation is that if the council adopted the not-to-exceed rate, the city may be able to pay cash instead of leasing equipment items listed in the budget, like a police patrol vehicle, trucks for new parks groundskeepers, a Kubota mower with a side-arm and an additional animal control vehicle, Miller said.

Generating more revenue in this one-time allowance of flexibility for the city can also help as the city prepares to see more losses related to the tax freeze in the coming years paired with the city’s growth leveling off, Derr said.

Because the tax freeze for qualifying homesteaders means a loss in revenue for the city, nonqualifying property taxpayers will have to take on more tax burden, and the city might not be able to keep decreasing its tax rate like it has in the past, Derr said.

“The reality is that police officers don't stop going to people's homes because they have a tax freeze; we don’t stop paving the roads in front of their house; we don’t bar them from the library or from the parks,” she said during the council meeting. “When you have a pie that is your tax levy and some people's pieces get smaller, but you need the pie to stay the same size, the only option is for everybody else's pieces to get bigger. And so, you will see in coming years that the ability we've had over the last several years to continuously drop the tax rate, sometimes by a substantial amount, that’s going to become less and less frequent just because we're having to make up for the implications of the senior tax freeze.”

Springtown’s proposed budget includes a 5% cost-of-living pay raise for city employees and a 5% increase on utility rates. The budget also allocates funds for park improvements, a new mower, a monument sign for the public library, creation of a citizens academy, equipment for a special response team and a UTV for administration and police. The city is also poised to hire an additional court clerk, water utility technician, two new groundskeepers for the parks, a full-time kennel technician and two part-time librarians.