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Cities around the Metrocrest area have begun to wrap up budget talks and set property tax rates for the new fiscal year.
The City of Carrollton was among the first round of such cities, with its council approving the new budget Sept. 1. Legislative hurdles and declining property values left the city in a tight spot this budget season.
The city saw its first dip in assessed property values, a 5.21% drop, since the housing market crash of 2008. Despite this, the council delivered a balanced budget and technically managed its 13th consecutive year of lower property taxes.
Since March, city staff has worked to prepare the budget to the council's liking and is ultimately pleased with the end result.
“We have some achievements, we provided a balanced budget to you guys,” Finance Director Melissa Everett said. “We cut the tax rate for its 13th year in a row, and our citizens will see an average savings of $72 on our tax bill. We also balanced out the investment in city operations, sometimes those strategies compete with one another. Providing a level of service that we do has a cost that goes along with it, but we were able to do that with a balanced budget. We funded over $118 million in capital projects, provided 2% employee raises, and we continue to focus on public safety with $98 million in operating [funding], and an additional $7.8 million in pay-go funding for fire stations and improvements for public safety.”
Staff will also receive a 1% “Carrollton Difference” one-time payment.
During early budget talks, city staff proposed a property tax rate of $0.537500 per $100 of assessed value, the same rate as last year. Not wanting to break the city’s streak and to show the city’s continued commitment to fiscal conservatism, Mayor Steve Babick instead proposed a tax rate of $0.537000, a one-twentieth of a cent decrease. Some on the council initially protested the suggestion due to its lack of impact, but ultimately the council unanimously voted to approve the rate Sept. 1.
The decrease has a negligible impact on the budget and results in an annual tax savings of about $1.70 for Carrollton’s average home value of $419,401 with the maximum state homestead exemption. Homeowners age 65 and older or with proof of disability can
receive an additional $110,000 exemption from the city.
Documentation from the city and comments from Finance Director Melissa Everett, Councilman Christopher Axberg and Mayor Babick indicated that the average homeowner will see $72 savings this year. The $72 savings seemingly does not align with the tax rate cuts mentioned by city officials in that same breath. Instead, it appears to largely be a result of an average decrease in property values throughout the city. The average Carrollton homestead shaved off $13,164 in taxable valuation compared to estimates from last year’s budget. This accounts for around $70 of the $72 saved, with the city’s tax cuts making up the rest.
Everett and city staff did not return a request for comment on the discrepancy by press time.
Regardless, this average $72 savings is likely the first real tax decrease, by the city’s accounts, in years. Despite a tax cut 2.5 times larger, the average Carrollton homestead saw a $98 increase in its tax bill last year, due to higher housing prices. Individuals will see a higher or lower tax bill based on the specific valuation of their property.
Even with the claims of a lower tax rate, Texas’ Truth-in-Taxation laws required the city to officially announce this year’s cut as a tax increase. Using formulas prescribed by the Texas Comptroller, Carrollton’s No New Revenue (NNR) rate for the proposed budget was $0.528076. The adopted rate of $0.537000 is technically an increase, according to the state, because it is 1.7% higher than the rate that would have generated the same revenue as last year from the existing tax base.
Babick said the $72 savings was closer to $135 on a tax-adjusted basis according to the Consumer Price Index website. He also said this was the fourth year where capital spending was slated for over $100 million.
Some homeowners will have their tax savings effectively nullified by the city’s new stormwater maintenance fee. Beginning Oct. 1, citizens will see this new fee added to their utility bills each month. Residents will pay between $48 and $84 annually, with around 80% of properties falling into Tier 2 rate of $7.25 per month. Carrollton joins many other North Texas cities that have implemented stormwater fees, including Addison, Coppell, Farmers Branch, Lewisville, Plano and more. Sanitation service fees will also see an increase from $26.30 to $27.36 for Carrollton solid waste customers.
Beginning in the upcoming fiscal year, a change in accounting for property tax revenue resulted in an increase in revenue in the general fund; however, those funds will be annually transferred out for capital investments. The total budget for the general fund in the upcoming fiscal year is $161,867,462.
Council applauded staff for a job well done in spite of this year’s challenges.
“I just wanted to be able to call out to our citizens the phenomenal job that our staff and specifically the finance department has done,” Axberg said. “This is the 13th year, as mentioned, that we will be reducing taxes for our citizens, which, as stipulated, has an average (savings) of $72 per citizen. That is phenomenal, especially taking into consideration the pressures that we are under with a flat year-on-year Carrollton total taxable value, as well as the upcoming legislative session that is looking at both our property tax, as well as regulations that will continue to be discussed on municipalities and our ability to be able to budget and manage a revenue.”
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