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A Letter from Chris:
Hi everyone,
Let’s talk through the tax rate and City budget for the upcoming Fiscal Year 2024. You’ll find a bullet point summary at the end if this letter is too long, and certain key points are bolded. There’s lots of information to share, so I’m trying to do it in a way that is thorough but accessible. The full budget presentation is in the new Presentations section below if you would like even more detail.
I will start off by saying that Interim City Manager Cary Westin has been fantastic to work with, and he and his team have put together a proposed budget that is balanced and responsible and that maintains City services (and increases streets and facility maintenance, public safety staffing, City employee wages, etc.) all while bringing in no new property tax revenue. It really is an excellent budget that addresses needs without raising taxes — I anticipate that the City Council will approve it unanimously, which definitely hasn’t always happened with City budgets in recent history.
As you may have seen, the City Council voted unanimously to introduce for Fiscal Year 2024 a tax rate of 0.832001, or about 83.2 cents per $100 of taxable value of property. This introduced rate is a maximum, so the final adopted rate can be lower but not higher than this. Adopting a tax involves trying to hit a moving target while the City gets new figures from the Central Appraisal District as they finalize their appraisal roll and other calculations, so it appears that we will likely adopt a tax rate even lower than what was introduced, probably something lower than 82 cents. This is a significant tax rate decrease from the Fiscal Year 2023 rate of 86.2 cents, which was itself a reduction of the rate of 90.7 cents that was maintained for Fiscal Years 2020, 2021, and 2022.
You may have seen the term “no-new-revenue rate” thrown around a lot, and rightfully so. We intend to adopt the no-new-revenue rate. What that means is that the tax rate we adopt will be the rate that offsets the increase in total property value, or the market value of all properties as assessed by the Central Appraisal District (not by the City!). The no-new-revenue rate is not a tax increase, and it also is not a tax decrease. FY 2024 will be the first time in a long time that the City portion of the property tax levy will not go up.
The City has not elected to adopt the no-new-revenue rate in recent memory, but what allows us to do it this time is the very healthy financial position we find ourselves in. The City has built up our fund reserves (basically our emergency savings) to 90 days of operating costs (which is VERY healthy in the eyes of the bond rating agencies, allowing us to obtain better interest rates for our bond funded projects). In addition, we will be ending FY 2023 with an operating surplus for of $37.6 million. The Council decided to use those surplus funds to pay down old debt for some transportation projects, saving more than $20 million in interest costs and freeing up about $8 million in our annual general fund budget into the future, which we plan to use for streets and facilities maintenance and needed fleet replacement. It’s so nice to finally have enough cash on hand to pay for these things without taking on new debt. After several years of weathering the heavy financial impact of the pandemic, we’re in a great place now.
I will be hosting a District 8 Community Meeting on Tuesday, August 8 at 6:00 PM at the Main Conference Room in City Hall, located at 300 N Campbell Street. Interim City Manager Cary Westin will be the guest speaker. Come meet him if you haven’t yet had the pleasure to. We’ll be talking budget and many other topics. You can park for free in the City Hall parking lot across the street after 5:00 PM.
I know the tax rate and budget can be complicated. If you have any questions, I’m more than happy to discuss them with you. The City Council plans to officially adopt the budget and tax rate following a public hearing at our next Regular City Council Meeting on August 15, and the new fiscal year starts on September 1.
Summary of key points:
• Proposed tax rate decrease of more than 4 cents per $100 of property value
• Likely adoption of no-new-revenue rate offsets property value increases, so the amount of the average tax bill does not increase (first time in quite a while!)
• Fiscal Year 2024 Proposed Budget increases streets and facility maintenance, public safety staffing, City employee wages, and more without a tax increase
• City Council used $37.6 million surplus from FY 2023 to pay down old debt and free up money for additional streets and facilities maintenance
Good wishes,
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