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2013 budget season begins
2 of 2
2013 budget season begins
Cities finalizing plans for new taxes and projects
As the 2012 financial year nears its end Sept. 30, area city officials are putting the final touches on their respective 2013 budgets.
There is optimism in Round Rock, Pflugerville and Hutto that the economic downturn that has negatively affected property values and tax revenues may be heading for a rebound.
“There is a real balancing act around here right now,” Hutto Mayor Debbie Holland said.
Round Rock’s budget
The City of Round Rock’s proposed 2012–13 operating budget is $141,506,614—an increase of more than $4 million from last year.
According to the proposed budget, the new funds will help pay for a planned 36 percent increase in street maintenance and new staff positions and programs, including expanding the Arts Program; funding Rock ‘N Holiday Lights; and hiring a neighborhood development coordinator, school resource officers and additional code enforcement officers.
“I believe the proposed budget reflects a fiscally responsible approach to improving the city’s current infrastructure, and meets the current demands while maintaining the city’s strong financial position,” Round Rock City Manager Steve Norwood said in a statement released by the city.
Round Rock is proposing lowering residents’ tax rates from 42.321 cents to 42.035 cents per $100 of property valuation. According to the city, the decrease would net the average Round Rock homeowner $12 in annual savings.
The city is counting on the lowered property tax rate being offset by Round Rock’s continued growth and the stabilization of sales tax revenue. Last fiscal year, Round Rock budgeted for $43.2 million in sales tax revenue but ended up collecting $47.6 million. For the upcoming fiscal year, the city is budgeting for $45 million in sales tax collections—a figure it hopes is closer to, but still below, the gross amount collected. The city expects 51 percent of its 2012–13 revenue to come from sales taxes.
“Sales tax has really been better than we thought,” Round Rock Finance Director Cheryl Delaney said. “We have a lot of levers if these numbers don’t come through. As long as we are in line with our financial management policy, we are in a good place.”
The total value of all taxable property is also increasing in Round Rock, according to the city. Although the average residential property value is expected to decrease by more than $1,500 during the next year, the city’s overall taxable property value has increased 2.9 percent to $8.2 billion—including $92 million in new property.
Delaney said the city is taking a less conservative budgeting approach than in years past so that the city is better able to spend its expected revenue.
“I think this is just a very accurate budget,” Round Rock Mayor Alan McGraw said at the City Council’s Aug. 14 budget retreat. “Ending up with an extra $7 [million]or $8 million isn’t very accurate.”
The City of Pflugerville is proposing lowering its 2012–13 budget by $868,693 from $62,346,456 last year to $61,477,763 in 2013. The decreased spending is a result of the city’s slowdown in growth versus previous years and an increase in the debt service payments of new bonds.
According to U.S. census data, between 2000 and 2012 Pflugerville’s population grew from 16,335 to 46,936, a 187 percent increase.
According to the city, growth projections during the next five years are expected to increase at a more modest 1.5 percent annually.
Coupled with the City Council’s commitment to lowering property taxes—from 59.9 cents to 59.4 cents per $100 of valuation, a one-half cent decrease—and the continuing drop in property values, the city saw little choice but to take a conservative approach to new spending.
“Primarily it is a very reasoned budget,” Pflugerville City Manager Brandon Wade said. “For the most part it looks the same as it did last year.”
The city’s reliance on different revenue streams will shift next year to reflect the expected drop in property values and a projected increase in sales taxes. Sales tax revenue in Pflugerville is expected to increase by 8 percent next year and fulfill one-fifth of the total incoming funds. Pflugerville plans to decrease its revenue dependence on property tax by 1 percent to 49 percent of its total.
Most of the spending increases for 2012–13 are expected to come from new staff positions and promotions. The new positions include a human resources coordinator for the Administration Department, an assistant Parks and Recreation Department director, an event coordinator, a Planning Department director and two new positions within the Police Department.
The City of Hutto is planning for an increase in revenue and spending for the 2012–13 fiscal year. Spending ($17,587,780) is actually expected to outpace revenue ($16,326,614) next year, a difference the city expects to be able to pay through unreserved funds and savings from prior years.
“We typically have money every year that rolls over from year to year,” Hutto Assistant City Manager Micah Grau said. “We actually think we are going to bring in more money and spend less money.”
With the addition of capital projects funded by bonds, Hutto’s total 2012–13 budget reaches $29,604,284—an increase of more than $6 million from the previous year.
The city is also planning for a property tax rate increase for residents from 51.6541 cents to 52.8691 cents per $100 of valuation, a 1.215 cent increase from last year.
“As Hutto has grown, we’ve had to put in a lot of infrastructure and a lot of roads, and unfortunately we have to pay for that,” Holland said. “I feel comfortable that what we are doing is the right thing.”
Property taxes will account for 41 percent of Hutto’s expected revenue—a 3 percent decrease from last year. According to the city, the value of the average Hutto home is expected to decrease for the fourth consecutive year. The city estimates the average house will be worth $124,557 in 2013, a $1,553 decrease from last year.
Despite the decrease in home values, Hutto residents can expect an $8 average annual increase on their property taxes during the coming year. The increase will go toward paying interest on a series of 2009 voter-approved bonds that funded a new YMCA facility, street improvement projects and an expected expansion of the city’s wastewater treatment facility.
“We have definitely in the past few years held the line,” Grau said. “This year we are branching out a little bit. It is time to make a move on some of these projects. I still think it is a very lean budget compared to a lot of other cities.”