There was a bit of back-and-forth discussion about the Sherman’s proposed tax rate during the City Council meeting this week. The concerns come as city staff are proposing a six-cent increase to the city’s property tax rate for the upcoming fiscal year.
This will bring the city’s property tax rate to $0.489 for each $100 of assessed value.
The conversation came as the council reviewed the proposed $94.6 million budget and scheduled a public hearing for the proposed tax rate. The motion to schedule the hearing, which traditionally is a safe motion, was opposed by Council Member Shawn Teamann in a vote of five to one.
“I think we are doing a good job, and I don’t want to take away from our city staff or department heads who need those funds for maintenance and operations,” Teamann said. “If there is another way to get there, I am all in … I just tend to be a little bit more conservative.”
The city previously discussed the budget in June when it held its annual budget retreat, and the city council is expected to return to tax rate talks when it meets on Aug. 19.
Higher-than-expected property values allowed city officials to reduce the rate from what was originally forecast earlier this summer.
“This draft budget includes a property tax rate of $0.489, which is lower than the rate that was presented at the budget workshop of $0.502,” Sherman Director of Finance Mary Lawrence said Monday.
Sherman’s tax woes come amid statewide reforms to property tax law. These reforms included a cap on how much new revenue a city can earn from existing property over the previous year without taking the resolution to voters.
Under the reforms, the cap for revenue without a vote will be reduced from 8 percent to 3.5 percent starting in the 2020-2021 fiscal year. This makes 2019 the last time that the city cap raise its rates under the current cap.
“What they are struggling with in Austin is how to fix school finance reform in a way that makes sense, thus why they are struggling,” Sherman City Manager Robby Hefton said in May. “Secondly, what impact does that have on cities and counties.”
The ongoing budget debate represents a balancing act by the city as it attempts to balance two separate tax rates: one to fund city operations and a second to finance the city’s outstanding debt. In May, the city projected a five cent increase to the bond rate due to recent debt, including $20 million for road improvements, including U.S. Highway 75 projects.
Since the last meeting, city officials have proposed several ways to soften the blow to taxpayers, including a $4 decrease to monthly solid waste collection fees. This would reduce the effective tax rate paid by residents to about $0.45 per $100 of value, Lawrence said.
However, members of the council they would like to see additional tax relief that would completely offset the increase through other means. Teamann said that this could be done utilizing a one-time payment made to the city by the Texoma Area Solid Waste Authority.
The payment is due to a revenue surplus for the regional landfill, who is projected to see more than $2.6 million in annual revenue starting this fall. For the city of Sherman, this equates to nearly $1 million in additional funding.