City plans to keep property tax rate as is
The city of Bastrop is proposing to keep its property tax rate flat for fiscal year 2017-18, maintaining the rate at 56.4 cents per $100 property valuation, according to a resolution the City Council approved last week.
Though no increase on the rate is proposed, the city could see a boost of $221,000 in its ad valorem revenue next year because home values in Bastrop County increased on average by 16 percent this year, according to preliminary data from the Bastrop Central Appraisal District.
The effective tax rate, or the property tax rate that would provide the city with about the same amount of revenue it received in the previous fiscal year, is 53.83 cents per $100 valuation. The rollback rate, or the maximum tax rate the city can assess without being subject to a rollback petition, has been calculated at 57.33 cents per $100 valuation.
Property tax revenue will make up 31 percent of the city’s total revenue for fiscal year 2018, said City Manager Lynda Humble. Forty-two percent of the city’s total revenue comes from sales tax collections.
“We have a significant need to diversify our revenue sources and increase our tax base,” Humble said at a July 20 budget workshop.
“Less than a third of our revenue sources are stable,” she said. “Most of the time, your property tax is stable because in normal situations your appraisal district will reappraise a third of their tax roll every year, with the expectation over a three-year period of time they will review all of the assessments.”
Humble said the city’s high dependence on sales tax revenue makes her nervous, as those collections fluctuate with consumer confidence.
“The more wealthy you feel, the more you spend,” she said. “The poorer you feel, the less you spend,” and many local, national and global factors can influence how consumers spend.
“Because we don’t have a lot of fluff in the budget, if we were to lose $1 million in revenue — because that’s the difference between sales tax and ad valorem tax, it’s about $1.1 million — if we were to lose that, we would make real cuts for service and we would be laying people off,” Humble said. “So, it makes me really nervous as your city manager. It should make you very nervous as council and the community.”
In July, Bastrop saw a 5-percent decrease in its sales tax revenue compared with the same month in 2016. Bastrop County, Elgin and Smithville all had sales tax growth.
“We’ve got to stabilize our sales tax while we grow our property tax,” Humble said.
Tourism is the city’s opportunity to grow its sales tax revenue, she said. A destination marketing organization was formed in the city this year to attract tourists and market Bastrop.
Expanding Bastrop property tax valuations through development and annexation to diversify the city’s dependence on sales taxes is among Humble’s goals for the upcoming fiscal year.
Under the current property valuations, 1 cent in the property tax rate produces $87,000 in revenue for the city. Humble said she wants a penny on the tax rate to produce more — and for that to happen, Bastrop needs to increase the number of properties on its tax rolls.
The city will have two public hearings on the proposed tax rate, Aug. 22 and Sept. 12, before the council votes to set the rate.