A public hearing on a proposed $231 million budget for fiscal year 2018 is scheduled for Aug. 15, at 6 p.m., at Sugar Land City Hall, 2700 Town Center Blvd. North.
Public hearings on the proposed 2017 tax rate are scheduled at the same location on Aug. 22 at 5:30 p.m. and Sept. 5 at 6 p.m.
The proposed budget was filed with City Council on July 18, and City Council has since held a series of budget workshops that continue through Aug. 31. The proposed budget, which builds on decades of financial strength, and workshop schedule are available at www.sugarlandtx.gov/budget.
“Our proposed budget is fiscally conservative and proactively responsive to changing consumer retail patterns, ongoing uncertainty in the oil/gas market and the city’s aging infrastructure and population,” said City Manager Allen Bogard. “Issues facing our residents – including declining revenue streams, unfunded state mandates and preemption of local control – create challenges in maintaining the high level of services citizens expect while maintaining one of the state’s lowest tax rates. Our ability to continue providing a high level of services and low taxes depends on balanced economic development, comprehensive future land use planning and a strong financial position.”
The proposed budget implements strategies to improve the resiliency of the city’s finances using conservative revenue estimates and minimal additions to the budget. It is based on City Council-approved financial policies that call for an effective tax rate – or, simply put, the “no new taxes” rate required to raise the same amount of revenue in 2017 from properties that were on the tax roll in 2016 – plus 3 percent to address annual inflationary costs of doing business. Other recommendations include:
* Implementation of annexation for Greatwood and New Territory, with annexation revenues covering all annexation costs;
* Funding for rehabilitation of streets, sidewalks, drainage, parks and facilities at a reduced amount, part of a strategy to move away from sales tax funding for annual infrastructure reinvestment and fund it through more stable revenue sources;
* Recognition of more than $500,000 in savings captured through decreases such as a reduction in the amount reimbursed to HOAs for landscaping services and electricity rate costs; and
* Continued implementation of the parks bond projects totaling $31.5 million for which voters authorized an increase of 3.1 cents on the tax rate in 2013 – recognizing that, while the city has so far avoided the full increase and only raised the rate .7 cents in 2014, it may not be affordable to continue to subsidize these projects without cutting basic services or implementing the full 3.1 cent increase in the current economic climate.
Lower than expected residential property growth
“In most years, the revenue required to achieve the effective tax rate plus 3 percent doesn’t require any adjustment to the tax rate itself,” said Bogard. “The growth in property values covers this conservative growth in expenditures. This year, however, property revaluation was only 1.53 percent for residential property and 3.53 percent for commercial – which means we either have to cut services or raise the tax rate.”
During the first budget workshop on Aug. 3, council members expressed concern about the decrease in funding available for rehabilitation due to the slowdown in sales tax revenue and valuations that have fallen below projections. Accordingly, City Council discussed three potential tax rates during a workshop on Aug. 10:
* Keeping the current rate of 31.595 cents would require budget cuts of $802,710 from the proposed budget, resulting in a reduction in service levels.
* The effective tax rate plus 3 percent of 32.233 cents funds the budget as proposed and is consistent with the City Council-adopted Financial Management Policy Statements.
* A rate of 33.007 cents, which would fund the FY18 budget as proposed and provide for replenishing rehabilitation funds reduced in the proposed budget by recovering revenue lost through the decline in sales tax revenue approved for property tax reduction – equal to .774 cents on the 2017 property tax rate.
The City Council also discussed the difficulty in making such financial decisions that impact residents and businesses while the state legislature continues its consideration of imposing revenue caps on cities across Texas. Not only would such revenue caps provide no tax relief to residents, but – if passed – they will also have unintended consequences on the city’s ability to adequately fund services such as public safety in the coming year and long-term.
Public input encouraged
City Council will continue to discuss budget and tax rate considerations at future meetings. At the Aug. 15 meeting, City Council will also take a vote to consider a maximum proposed 2017 tax rate up to 33.007 cents per $100 at a future meeting. Proposed rates for consideration must be posted by law and are for discussion purposes only; a final decision to approve the budget and set a tax rate is not scheduled until Sept. 19. For more information on the budget, proposed tax rate and public hearings, visit www.sugarlandtx.gov/budget.