The Round Rock City Council unanimously approved on second and final reading the FY 2013 budget and tax rate at its Sept. 27 meeting. First reading was Sept. 13.
The budget features a tax rate slightly lower than last year while increasing funding for street maintenance by 36 percent, and maintaining an emphasis on public safety, community development and parks.
City Manager Steve Norwood formally presented the draft budget (PDF) to the City Council on Aug. 1. The City Council reviewed the budget at its Aug. 14-15 annual planning retreat.
â€śThe City continues to take a conservative, long-term approach to its financial and operational planning,â€ť Norwood said. â€śThe decisions that are made now will strongly influence what the City will look like and how it will operate for years to come.â€ť
Priorities addressed in this budget provide adequate funding to maintain current service levels in a growing community, with the exception of increased funding for street maintenance.
The budget features a tax rate of 42.035 cents per $100 of property value, compared to 42.321 cents last year. The owner of an average value home will pay $732.29 under the proposal, about $12 less than last year.
The City of Round Rock continues to have a property tax rate that is among the lowest of any medium-to-large city in the state, including those cities with an additional Â˝ cent sales tax for property tax reduction.
Sales tax revenue is extremely important to the City in that it reduces property taxes and makes up approximately 51 percent of the General Fund revenue. Sales tax revenues have seen a stabilization trend for the past two years, and are continuing.
While Dell sales tax figures continue to show declines from the previous year, sales tax from other sources within the City help to reduce the impact. Due to the volatile nature of sales tax revenues, a conservative approach was utilized in estimating this budgeted amount. Reflecting current and anticipated economic conditions, this budget includes a sales tax estimate for the General Fund of $45 million.
Water and wastewater rates will remain unchanged from current rates. The City Council adopted a four-tier water rate structure in May that is designed to encourage conservation.
â€śI believe the proposed budget reflects a fiscally responsible approach to improving the Cityâ€™s current infrastructure, and meet the current demands while maintaining the Cityâ€™s strong financial position,â€ť Norwood said.
What is the total Operating Budget?
$ 87.7 million
Debt Service Fund
$ 12.1 million
Water/Wastewater Utility Fund
$ 40.0 million
Drainage Utility Fund
$ 1.7 million
$ 141.5 million
The General Fund increased by $3.6 million, what is driving the increase?
Priorities addressed in the budget are to provide adequate funding to maintain current service levels, increase investment in the Cityâ€™s street maintenance program, focus on community development and parks and recreation, and address employee compensation plans.
The proposed budget continues significant funding for the Cityâ€™s pavement management and street maintenance programs with expenditures proposed at 36% over last year
Continued focus on public safety, community development and parks to ensure the high quality of life enjoyed by Round Rock citizens and visitors
Address compensation through a City-wide comprehensive market study and through other existing compensation programs
What is the tax rate?
The property tax rate is 42.035 cents per $100 of valuation, which is the same as the effective tax rate. The adopted tax rate for FY2012 was 42.321 cents per $100 of valuation.
What is the average home value?
The average home value for FY2013 is $174,210. This is slightly below last yearâ€™s value of $175,775.
Under the adopted rate the average home owner would pay $732.29
The average home owner paid $743.90 in FY2012 -- they will pay approximately $12 less in FY2013
Why is the tax rate lower than last year?
The effective tax rate provides the same amount of revenue collected from properties on the tax roll last year, however it does not include new properties. This state-mandated effective rate calculation requires taxing entities to account for changes in the value of existing properties. Since the total property value for commercial and residential properties increased from last year, the tax rate is lower to generate the same amount of revenue.
According to Truth in Taxation, a property tax increase only occurs if the proposed tax rate is higher than the effective rate. Since the proposed property tax rate of 42.035 cents is the same as the effective rate of 42.035 cents, this is not considered a property tax increase.
Total taxable value for FY2013 is $8.2B (up 2.9 percent from FY2012 of $8.0B)
Effective property tax rate: 42.035 cents per $100 of value
Proposed property tax rate: 42.035 cents
Are there any changes in Utility rates?
A water conservation and drought contingency program was established to conserve existing water sources and reduce the impact of water shortages. In May 2012 a four-tier conservation rate structure was implemented in the summer months to address conservation concerns.
Round Rock water and wastewater rates continue to be among the lowest in the area.
Average Utility monthly bill (based on 10,000 gallons water, 8,000 gallons wastewater): $96.02
Water $37.34 & Wastewater $38.47, Garbage & Drainage $20.21
What is the Sales Tax Budget?
The economic environment is a major contributor to increased sales tax collections:
Round Rock is one of the most sales tax reliant cities in Texas. More than 51 percent of our revenue comes from sales tax, of that amount one company, Dell, generates about 37 percent of the sales tax revenue.
The General Fundâ€™s major sources of revenue -- sales tax (51 percent) and property tax (26 percent) -- make up 77 percent of General Fund revenues. The remaining 23 percent comes from various charges for services and franchises.
What is the Financial Management Policy and how does this affect the proposed budget?
Revised in September of 2009, the policy states that over an 8-year period (by 2017), the City will reduce its operational reliance on Dell to 20 percent of overall sales tax revenues.
This affects the budget by limiting the amount of sales tax revenue collected from Dell to pay for general operations. Any amount collected above this amount can be used for one-time capital purchases or to pay down debt. This policy helps the City to maintain long-term financial stability by limiting operational reliance on a volatile revenue source.
In accordance with the policy, operational reliance on Dell has been reduced to 33 percent, or $15 million.
How does the refunding of General Obligation debt affect the budget?
The City had the opportunity to refinance a portion of its outstanding debt in November 2011. The City refinanced $19.5 million in GO bonds. The savings in interest costs over the life of the debt are projected to be $2.3 million. These savings are reflected as a reduction of the debt service requirements.