Item 6C
Consider proposal to adopt a tax increase
Item 6C
Mayor and members of the City Council, this presentation will cover Item 4J on August 2nd agenda
1
Requirements
Truth in Taxation requires
Proposed tax rate $.462 (15th consecutive year)
Effective tax rate $.446120
Governing body vote
Proposal to adopt the “increase” on a future agenda
Hold two
public hearings
August 15, 2017
September 5, 2017
Even though FY 2018 will mark the 15th consecutive year the tax rate is held steady at .462. Each year we are required to calculate the effective and rollback rate. The effective tax
rate is simply the calculated tax rate required to maintain the same property tax revenue for FY 2018 as collected in FY 2017 for existing property. This year the effective tax rate
is .44612 which is 3.56% less than the proposed tax rate of .462 therefore the proposed tax rate will generate additional property tax revenue than the effective tax rate.
In accordance
with state law, the governing body must vote to place the proposal on a future agenda and hold two public hearings to give the residents the opportunity to discuss the proposal. The
first public hearing will be held on August 15th.
Because the proposed tax rate (.462) exceeds the effective tax rate (.446120) or rollback rate (.484271) the law requires that
the city council hold two public hearings on the proposal.
2
It is important to note the city has chosen homestead exemption as our form of tax relief to maximize targeted relief for the residents. Also, if you recall city council increased the
homestead exemption to 20% from 16% (25% increase from last year). This graphic depicts the historical tax rate equivalent after adjusting for the homestead exemption….example..2018
the tax rate equivalent reduces the rate down to .3696 per $100 which is approx 9.24 cents tax rate reduction.
Average appraised value home $661,961 and taxable value $539,114…per the
certified roll
3
Historical Effective Tax Rate Analysis
Residents received a larger tax relief with homestead exemption than if the City would have adopted the effective tax rate.
Even though FY 2018 will mark the 15th consecutive year the tax rate is held steady at .462. Each year we are required to calculate the effective and rollback rate. The effective tax
rate is simply the calculated tax rate required to maintain the same property tax revenue for FY 2018 as collected in FY 2017 for existing property. This year the effective tax rate
is .44612 which is 3.56% less than the proposed tax rate of .462 therefore the proposed tax rate will generate additional property tax revenue than the effective tax rate.
This chart
depicts a historical analysis of the effective tax rate when compared to the adjusted tax rate for the homestead exemption…as you can see each year the residents received larger relief
through the city’s targeted approach (homestead exemption as opposed to adopting the effective tax rate or just simply reducing the rate and spreading the relief to all tax payers including
the businesses.
4
Financial Considerations
FY 2018 Property Tax Revenue
$1,058,004 reduction
The difference between the proposed tax rate of .462 and the effective tax rate of .446120 would result in a property tax revenue reduction of $1,058,004 for FY 2018
$85.70 annual
savings to average home in Southlake
5
Summary
In summary,
we have targeted tax relief for the residents through the homestead exemption,
7th year for the tax relief since 2009
The current 20% homestead exemption provides a 9.4
tax rate reduction from the proposed tax rate of .462
while allowing the City to continue to successfully meet its responsibilities for good financial management practices.
The recommended
rate will provide additional relief that is the equivalent of an additional 1.85 cent property tax reduction for residential taxpayers but the overall 20% exemption provides a 9.24
tax rate reduction from .462 for the residents, while allowing the City to continue to successfully meet its responsibilities for good financial management practices.
2017 Average home
assessed value=$661,961 and taxable $539,114
2016 Average home assessed value=$614,283 and taxable $520,142
3.6% increase in average taxable value
BASED ON MAY ESTIMATED VALUES
20%
revenue reduction=$5,761,142
Additional 4% revenue reduction=$1,152,230
6
Questions
7
If you have any questions regarding this item, please contact me at 817-748-8042. Thank you for your attention.
Background
Proposed tax rate $.462
15th consecutive year
7th year for targeted tax relief
20% homestead exemption
Even though FY 2018 will mark the 15th consecutive year the tax rate is held steady at .462. Each year we are required to calculate the effective and rollback rate. The effective tax
rate is simply the calculated tax rate required to maintain the same property tax revenue for FY 2018 as collected in FY 2017 for existing property. This year the effective tax rate
is .44612 which is 3.56% less than the proposed tax rate of .462 therefore the proposed tax rate will generate additional property tax revenue than the effective tax rate.
8
City of Southlake Strategy Map
The City of Southlake provides municipal services that support the highest quality of life for our residents, businesses, and visitors. We do this by being an exemplary model of balancing
efficiency, fiscal responsibility, transparency, and sustainability.
C1 Achieve the highest standards of safety & security
C2 Provide travel convenience within City & region
C3 Provide attractive & unique spaces for enjoyment of personal interests
C4 Attract & keep top-tier businesses to drive a dynamic & sustainable economic environment
C5 Promote opportunities for partnerships & volunteer involvement
Serve our Customers
Manage the Business
B1 Achieve best-in-class status in all City disciplines
B2 Collaborate with select partners to implement service solutions
B3 Enhance resident quality of life & business vitality through tourism
B4 Provide high quality services through sustainable business practices
B5 Enhance service delivery through continual process improvement
B6 Optimize use of technology
Provide Financial Stewardship
Promote Learning and Growth
F1 Adhere to financial management principles & budget
F2 Invest to provide & maintain high quality public assets
F3 Achieve fiscal wellness standards
F4 Establish & maintain effective internal controls
L1 Ensure our people understand the strategy & how they contribute to it
L2 Enhance leadership capabilities to deliver results
L3 Attract, develop & retain a skilled workforce
L4 Recognize & reward high performers
L5 Empower informed decision-making at all levels in the organization
C6 Enhance the sense of
community by providing excellent customer service and citizen engagement opportunities
L6 Foster positive employee engagement
Deliver on Our Focus Areas
This agenda item links specifically to the city’s strategy map-corporate business objective of Adhere to financial management principles & budget
9