Mayor Craig Morgan pens a monthly column for the Round Rock Leader. This is a repost of his most recent feature.
Budget season is upon us in Round Rock.
Although city staff have been working for months to put together a proposed budget, we have just recently started to hold public hearings and take necessary votes to inform the public and ultimately pass a budget that will set our course for the next fiscal year. Other taxing entities, such as Williamson County and the Round Rock school district, go through the same process every year for their own budgets.
The city’s budget includes a lot of services that citizens use every single day, including police and fire protection, roads, parks, the library and much more. The general fund is the primary fund for these core government services, and is funded by traditional tax sources, such as property taxes.
After we set our budget for the upcoming year, we have to decide on a property tax rate that combines with other sources of funding, such as sales tax, to cover the expenses of providing these services. At our most recent City Council meeting, we voted to set the maximum tax rate for our upcoming budget at 42 cents per $100 valuation – lower than the current rate.
That tax rate means if your home is valued at $241,538 — the median value in Round Rock — the city portion of your property tax would be less than $85 per month.
It’s pretty impressive when you consider the services you get for less than the average cable bill: outstanding public safety, plentiful parks and trails, transportation projects and maintenance, library services, community events, planning services and everything else that makes our community a place people are proud to call home.
The city leverages other revenues such as hotel occupancy taxes to fund our tourism program and utility rates to fund our water, wastewater and drainage systems.
We are able to provide property tax relief through a half-cent sales tax approved by voters in the ’80s. Did you know that without our sales tax, our property tax rate for the upcoming fiscal year would need to be 56 cents to raise the revenue for our services? That would be an increase of $28.17 per month for the median value home — or a 33 percent increase.
Thanks to all of these funding sources, the city’s property tax rate is among the lowest in the state. Is that something to hang our hats on? Sure, but property taxes shouldn’t be a race to the bottom.
Being affordable must be balanced with providing great value. Go too cheap and you risk falling behind on street maintenance, crime, recreation and a whole host of other issues that can creep up on a growing city like ours.
Of course we are not the only taxing entity on your property tax bill. Without a doubt, the government agency that receives the bulk of Round Rock residents’ property tax bill every year is the school district. Unfortunately, though, a sizable portion of your property tax to the school district does not actually stay with your local school district.
On average, $277 of residents’ annual tax payment to the Round Rock school district is actually sent to the state under the infamous “Robin Hood” system.
The school district will raise a total of $27.8 million in additional tax collections in the upcoming year. However, $32.3 million will be passed on to the state.
Under the state’s current recapture or “Robin Hood” system, “property wealthy” districts must send their funding to the state to be given to districts deemed “property poor.” But the reality is, as property values have gone up across Texas, state funding for schools has gone down.
Unlike the school district, the city generally does not provide money to the state or receive any money for our operations other than small grants. However, we expect during the upcoming legislative session to see a handful of elected officials on the state level call for a property tax revenue cap on city governments.
Property tax revenue caps are popular politically, but remember: cities receive just 16 percent of property taxes levied in the state, while the school district makes up more than half of your property tax bill.
At the same time, school property taxes have been rising at double the rate of cities’ statewide because the Legislature continues to reduce the state’s share of school funding. That means school districts end up raising property taxes even more to raise the necessary revenue for their operations.
During the upcoming legislative session, you can expect to see city officials from across the state implore state officials to fix the actual problem behind rising property taxes, instead of playing Robin Hood and pointing a finger at entities that have much less effect on your property tax bill.
Over the years, our city has worked hard to be a good steward of taxpayer money, leveraging alternate funding sources to keep property taxes low.
Did you know the Round Rock Sports Center and Dell Diamond — two of our community’s most visited amenities — operate with zero property tax support? And that even though single-family residences make up 93 percent of our city’s parcels of land, it’s actually the 7 percent of non-residential development that pays almost half of our total property tax revenues?
Round Rock is a unique city that has been able to leverage our diverse and growing economy, but our economy is never guaranteed to stay stable. Having the ability to set a property tax rate that fits our needs is important to provide essential services at the level our residents expect, and that will become much more difficult if the state chooses to tie our hands this legislative session. This is our home, and budget decisions should be made here.
Want to know more about the city’s proposed budget? Visit roundrocktexas.gov/budget.