Tax Rates: Can You Spare $20?
Tax rates are confusing things. No one likes to pay taxes but they are necessary to provide the city services we all appreciate having. Are those services worth paying an additional $20 in 2015? That’s the basic issue that will be decided by the Addison City Council on September 9 when the 2014-15 budget is adopted.
This time of year, you hear a lot about reducing taxes but, sometimes, reducing taxes can actually harm you, the citizen. Reducing the tax rate can also mean that the Town cannot make investments that will benefit you in years to come. Those are the hard decisions elected officials must make in adopting the budget. Do we accept short term pain (a little more cash out now) to save a lot more cash in the future? Some call it delayed gratification, supposedly one sign of maturity.
You’re going to be hearing a lot about the Effective Tax Rate and the Rollback Tax Rate but what do they mean? Property taxes are based on each $100 of value. The current effective rate is $0.536339 per $100. That rate would give the Town the same amount of revenue it received the previous year on property taxed in both budget years. The rollback rate is $0.578359 per $100 of value. If the tax rate the Council approves is raised above the rollback rate, citizens can petition and trigger an election to lower the tax rate to the rollback rate. Not gonna happen so don’t worry about the rollback rate. It is of no consequence in this discussion.
The City Manager’s proposed budget, prepared to meet specific directives from the City Council, anticipates a tax rate of $.05718 which is the same rate as last year. BUT, because home values have increased, that means, the Town would have revenue of $21,577,690 in 2015, not the $19,804,330 received in 2014. Much of that goes to debt service for Belt Line Road and other capital projects which you, the voter, approved knowing that your taxes probably would increase as a result. Voters were told it might be up to a 6 cent increase; it has actually DECREASED $.0082 to date and 80 % of the bonds have been issued.
Increased employee compensation is part of the tax rate discussion though the most recent, proposed amount would bring only police and fire close to competitive levels with other communities. The rest of the employees are left out in the latest scenario that the mayor is touting as “a solution”. The budget also recommends a few other projects.
But what does it mean to you, Harry Homeowner, with your increased property value? Just over a $20 increase:
Average home value after Average home value after
homestead exemption – $258,203 homestead exemption – $254,383
Addison taxes – $1,476.40 Addison taxes – $1,454.56
The difference – $21.84
But my taxes are five times that, you say? True, but your tax bill includes school, hospital district, county, and other types of taxes over which the Town has no control.
Politicians love to talk about reducing taxes and doing so is popular with voters. As of Aug. 26, the mayor was recommending at least a $.01 tax cut but doing that would give the city no funds to repair our aging infrastructure (think street maintenance, sidewalks) nor would there be funds available for unanticipated opportunities.
Think, for a minute, about Addison Circle. When Post Properties came along with their work/play/live concept back in the 1990’s, thanks to prudent management, the Town’s $9 million investment for streets, sewers and parks in Addison Circle came out of cash reserves, not taxes or bond issue indebtedness. According to Dallas County Appraisal District records, Addison Circle is now valued at over $355,000,000 – not a bad return on a $9 million investment in 20 years. That’s called investing for the future which we could miss out on.
Does our city council have a vision for the future? Do they have the courage to say “no” to the mayor who is pushing to cut taxes? Stay tuned. And, when election time rolls around next May, remember who voted for immediate gratification and who voted to invest in our employees and in the future.