Tax rate increase easier to stomach when you realize you voted for it


The property tax rate proposed in the City’s $330 million fiscal 2018 budget is higher than last year’s. Lest you think we’re on a feeding frenzy of spending, know that most of the increase is needed to support bond projects voters approved in 2013.

The proposed rate is 43.000 cents per $100 of valuation. That’s an increase of 2.7 cents over the effective rate, which is the rate that generates the same amount of revenue as last year based on the new year’s total value of taxable properties.

Let’s dig into that 2.7 cent increase:

  • 1.2 cents is for debt payments on voter authorized bonds from the 2013 election
  • 0.9 cents is for new operating costs associated with those bond projects
  • 0.6 cents is for additional operating costs to keep up with rising costs and growth

So 2.1 cents is related to bonds voters approved. That’s a little more than three-quarters of the increase. (Wondering about progress on the bond projects? For your eyes only, watch this Bond-inspired video to get caught up.)

Bottom line to you: The owner of a median value home ($227,714) in Round Rock will pay $7.58 more per month in City property taxes compared to last year.

While the property tax rate gets a lot of attention — and rightly so since it determines what you’ll pay each year — it’s not the largest revenue component of the proposed budget. Property tax revenue makes up 16 percent of the $330 million budget. By comparison, sales taxes make up 19 percent (more on that below).

We promised we’d slice and dice the tax rate for you in the last Budget Bite post, so here are some more tidbits.

Here’s a tasty morsel you might not be aware of. In the 1980s, Round Rock voters approved increasing the sales tax rate by a half-cent. The revenue from that half-cent is dedicated to reducing the property tax rate. The impact of that reduction is 14.063 cents. In other words, without it we’d be looking at a total tax rate of 57.063 cents.

Another way to look at it: That half-cent for property tax reduction saves the median value homeowner a rather tasty $26.69 a month.

The half cent for property tax reduction is different from the half cent dedicated to transportation and economic development we talked about in the previous Budget Bite.

Sales taxes are obviously a key ingredient in funding City services. We project $64.3 million in sales tax revenue next year, compared to $53.7 million from property taxes. That’s why we encourage residents to Shop the Rock, and why we promote tourism so seriously. (Though we’re not always super serious in how we explain it.) (We’re more serious about explaining sales taxes.)

The tax rate is divided into two components: the rate needed to pay debt and the rate needed for maintenance and operations (M&O). Here are those numbers:

Debt rate14.214 cents
M&O rate28.786 cents
Total43.000 cents

 

For our next Budget Bite, we’ll review staffing changes in the proposed budget.

Key dates

  • Aug. 10 — City Council vote to publish and propose maximum tax rate, set public hearings
  • Aug. 22 — City Council packet briefing and work session on proposed budget and tax rate
  • Aug. 24 — Regular City Council meeting
    • First tax rate public hearing
    • Budget public hearing
    • First reading vote to adopt tax rate and budget ordinances
  • Aug. 31 — Special called City Council meeting for second tax rate public hearing
  • Sept. 14 — Regular City Council meeting
    • Final adoption of tax rate and budget ordinances
    • First reading of utility rate ordinances
  • Sept. 28 — Regular City Council meeting for final adoption of utility rate ordinances.