Agenda No. 19.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | August 15, 2023 |
| Department: | City Secretary |
| Subject: | Ordinance 23-T-19 – Conduct a Public Hearing and approve an Ordinance approving the appraisal roll; setting the tax rate; levying and assessing general and special ad valorem taxes for the use and support of the municipal government of the City of Schertz, Texas. First Reading (S.Gonzalez/J.Walters) |
BACKGROUND
At the August 4, 2023 Council meeting and Budget Workshop, the City Council, by record vote, established a proposed preliminary maximum tax rate of $0.4872, per $100 of value, with the M&O rate at $0.3324 and the I&S portion of $0.1548. This rate was under the Voter-Approval rate but greater than the No-New-Revenue rate.
In accordance with Chapter 26.05(d) of the State’s Property Tax Code, a governing body must hold a public hearing on the tax rate if the proposed tax rate exceeds the lower of the No-New-Revenue or Voter-Approval Tax Rate. In this case a hearing is required as the proposed rate does exceed the No-New-Revenue rate.
The first public hearing will be held on August 15, 2023 regular session of City Council. A second public hearing will be conducted on September 5, 2023.
During the tax rate adoption process Council can approve a lower rate, however they will not be able to approve a rate higher than this without republishing the notices and holding additional public hearings. Due to timing constraints set by the State Tax Code 26.05(a), the latest council could set a new preliminary rate was August 15, 2023 without calling special meetings or declaring an emergency.
Per Sec 26.05(b) of the Tax Code, the tax rate can only be adopted with more than 60% of the votes in favor of the proposed tax rate. Since Schertz has 7 voting councilmembers, 5 members must vote in favor of the tax rate for it to pass.
In accordance with Chapter 26.05(d) of the State’s Property Tax Code, a governing body must hold a public hearing on the tax rate if the proposed tax rate exceeds the lower of the No-New-Revenue or Voter-Approval Tax Rate. In this case a hearing is required as the proposed rate does exceed the No-New-Revenue rate.
The first public hearing will be held on August 15, 2023 regular session of City Council. A second public hearing will be conducted on September 5, 2023.
During the tax rate adoption process Council can approve a lower rate, however they will not be able to approve a rate higher than this without republishing the notices and holding additional public hearings. Due to timing constraints set by the State Tax Code 26.05(a), the latest council could set a new preliminary rate was August 15, 2023 without calling special meetings or declaring an emergency.
Per Sec 26.05(b) of the Tax Code, the tax rate can only be adopted with more than 60% of the votes in favor of the proposed tax rate. Since Schertz has 7 voting councilmembers, 5 members must vote in favor of the tax rate for it to pass.
GOAL
To adopt a tax rate in compliance with state statues and the City Charter.
COMMUNITY BENEFIT
The programs funded by this tax rate will provide additional benefits and service levels to the community.
SUMMARY OF RECOMMENDED ACTION
Staff recommends adoption of the tax rate of $0.4872
FISCAL IMPACT
This tax rate will raise more total property taxes than last year by $2,398,167, or a 9.9% increase, and of that amount $554,255 is tax revenue to be raised from new property added to the tax roll this year. These funds will go to pay for employee compensation and infrastructure such as roads, parks, and city facilities.
The current property tax rate is $0.4950 per $100 valuation. The proposed maximum tax rate will be $0.4872 per $100 valuation. The M&O portion of the property tax rate will decrease to $0.3324 from $0.3470 per $100 valuation. The I&S portion will increase to $0.1548 from $0.1480 per $100 valuation.
This tax rate will raise more taxes for Maintenance and Operations than last year’s tax rate. The tax rate will effectively be raised by 3.5% and will raise taxes for maintenance and operations on a $100,000 home by approximately $11.24.
The current property tax rate is $0.4950 per $100 valuation. The proposed maximum tax rate will be $0.4872 per $100 valuation. The M&O portion of the property tax rate will decrease to $0.3324 from $0.3470 per $100 valuation. The I&S portion will increase to $0.1548 from $0.1480 per $100 valuation.
This tax rate will raise more taxes for Maintenance and Operations than last year’s tax rate. The tax rate will effectively be raised by 3.5% and will raise taxes for maintenance and operations on a $100,000 home by approximately $11.24.
RECOMMENDATION
Staff recommends that the City Council approve Ordinance No. 23-T-19 approving the Fiscal Year 2023-24 Proposed Tax Rate on first reading.
MOTION LANGUAGE: “I move that the property tax rate be increased by the adoption of a tax rate of 0.4872, which is effectively a 7.0% increase in the tax rate.”
MOTION LANGUAGE: “I move that the property tax rate be increased by the adoption of a tax rate of 0.4872, which is effectively a 7.0% increase in the tax rate.”