“We have to decide what we as a city are willing to pay for and what we are willing to cut.”
– Kyle City Manager Scott Sellers on setting the tax rate.
The Kyle City Council is about to vote on the 2015-2016 property tax rate. City Manager Scott Sellers believes understanding the particulars is important for residents.
In the overall breakdown of Kyle homeowner’s ad valorem taxes, the city accounted for about 19 percent in 2014- 15. Kyle officials expect that percentage to remain the same this year. Kyle’s proposed property tax rate is $0.6145, or roughly $.61 for every $100 of home valuation.
For an average home value in Kyle of about $155,000, the increase would be about $9.85 a month or $118.26 a year. Sellers explained what is included in the tax rate so residents can see how their property taxes work and what they are getting for their money. The tax rate is a combination of two buckets of funding, Maintenance and Operations, or M&O, and Interest and Sinking, or I&S. M&O funds city services such as public safety, parks, libraries and other departments.
I&S is the debt accrued by the city, currently $96.9 million. If approved by Kyle City Council, the tax rate for I&S would increase to $0.35 cents.
The $96.9 million figures includes $0.0762 for every $100 home valuation because Kyle voters approved a $36 million road bond package in 2013 of up to $.022, but the city’s finance staff reduced that amount significantly.
Kyle’s Finance Director, Pervez Moheet, said, “The city took advantage of a favorable bond market, the increase in assessed valuation [by the Hays Central Appraisal District], and the city’s strong bond rating to keep the rate to $0.0762.”
The I&S tax rate is unable to be changed; that is money already spent that must be repaid. Past debt for the city includes $30 million for FM 1626 expansion. The remaining $31 million bond debt includes major infrastructure improvements as well as new building construction.
The only proposed increase to the new fiscal year’s tax rate is about seven cents per $100 property valuation, which is allocated to pay the city’s annual debt service, both principal and interest. With the increase, the proposed tax rate for I&S is $0.35 cents per every $100 home valuation.
On the M&O side of the house, Sellers said the proposed tax rate is $0.26 per $100 valuation, which is unchanged from last year. That is possible in part because the (CAD) increased its home valuations approximate $10 per month.
Sellers crafted a proposed budget that brings in additional staff to support a growing city. He did so with input from city residents along with staff. His budget proposes hiring 24.5 fulltime equivalent (FTE) positions and reducing three positions. Essentially that means the equivalent of 22.5 employees, but some are part-time, so two part-time employees would be one FTE without benefits.
Sellers said he understands the desire to reduce property taxes. However, he asked what services city residents would be willing to cut in order to lower them?
Sellers believes cutting the M&O rate would hamstring city departments and create frustration among residents. “Our recent and projected growth of course brings in new tax dollars, but we still need to increase our ability to maintain a high level of services to our residents,” he said. “I know everyone loves lower taxes, but we have to decide what we as a city are willing to pay for and what we are willing to cut.”