Tax Rate, Libraries, and Rec. Centers

As Mayor, the FY 08 – 09 city budget was my fourth and possibly most interesting one. It was not the most interesting because of the tax rate, unfortunately, while we operate a very lean government and budget, we had to do our first rate increase since I’ve been Mayor. It was the most interesting because it raised one question the city council and community will need to answer. Is it our only goal to keep the property tax rate as low as possible?

Quick Review of budget process - City staff reviews projected revenue (property tax forecast from county tax collector, sales tax projects, etc.) that will fund the General Fund for the up coming year. We then establish a baseline of how much it will cost to provide the same services provided the previous year. Then with council input we adjust this to reflect the needs and request of the citizens.

For a rapidly growing city like ours, you can imagine that the demands for projects and services are constantly growing. Our task as council is to set them in the right priority. Up to now our growth plan has been simple but effective. Our plan has been to invest directly in infrastructure that will generate a return on investment to the community in the form of increased commercial tax base, increased sales tax, and more local jobs.

FM 1626 is the perfect example of this plan in action. Our direct investment in that road project brought in over 2 million square feet of commercial/retail development and a much need 128-bed regional Seton hospital. Our return on investment is increased sales tax, and increased commercial property tax base. As these project fully ramp up, it will allow us to reduce the burden on the residential tax base.

This strategy of directly investing property tax dollars into infrastructure improvements is working, but we are still about 5 years away from when we can fully reap from the increases in both sales and commercial property tax rate. Until then we will still need to rely heavily on property tax revenue.

So back to the question I posed earlier, “As a council, is it our only goal to keep the property tax rate as low as possible”. Accomplishing this would be fairly easy for council. Only spend money on projects that increase sales tax and commercial property tax base; and provide city services at the absolute minimum levels.

But is this our only goal or are we trying to accomplish more as a city. As I said during my closing comments on the budget, if the lowest property tax rate is our only goal, then we need to have some serious policy discussions about the capital projects we have coming up.

To put it bluntly, if we are currently having prolonged discussions about shaving one-tenth of a cent off the property tax rate, then we have to examine if we truly want to build a $4 million dollar library or a $15 million dollar recreation center or spend any more on park improvements before that 5 year period I spoke of earlier. While these types of project add greatly to quality of life, they are far from being self-sustaining and only increase the need for additional staff and annual operational costs.

Now I’m not advocating for or against these types of projects. As Mayor my job is to find a way to provide what our citizens want in a responsible manner. I’m merely raising the fact that as a community, we must actively decide what we want and more importantly what we are we willing to pay for.

Mayor Mike Gonzalez