City council members are expected to approve a higher budget for the coming fiscal year when they meet tonight, Thursday, Aug. 31 – and a lower tax rate to pay for it.
The lower tax rate comes about courtesy of rising property values that have been on the upswing for a few years. Those rising property values will be enough to provide the city with enough income to get along despite a 20 percent homestead exemption the council granted earlier this year.
City Manager Michael Kovacs figured the owner of a house valued last year at $250,000 and raised this year to $275,000 for property tax purposes would still pay about $300 less in city property taxes this year, provided that house was a homestead.
A homestead must be the owner’s primary residence. Only one house can be registered as a homestead; second homes do not qualify. Home owners who have filed for homestead exemptions with Nueces County and the Port Aransas ISD will have their homes added automatically to the city’s homestead exemption rolls, the county tax assessor’s office has said.
The proposed tax rate for Fiscal Year 2006-07 is 29.7 cents per $100 valuation, down from last year’s 37.8 cents.
The council held hearings on the proposed tax rate on Thursday, Aug. 10, and Monday, Aug. 21. Nobody showed up to speak at either hearing.
Despite the drop in homesteaded property taxes, the council is looking at a budget for the coming year of $22,808,186 as opposed to this year’s $13,226,385. That is a nominal budget increase of 72.4 percent, but that apparent increase may be misleading.
That’s because many of the expenses figured into the budget come from other sources. For instance, expenditures for the nature preserve are expected to go up to $1,680,000 next year, far above this year’s $731,322. But the funds for those expenses come not from the city’s general fund or from property taxes, but from certificates of obligation approved by the council in 2004 specifically for the purpose of paying for the preserve.
Likewise, Kovacs originally proposed spending $1,144,039 on municipal harbor improvements; this year the city spent only $306,399 on the harbor. Much of that improvement would have come from the harbor fund, which the city has been socking away for just such a purpose.
In the event, however, the council may tell Kovacs to take some of the Harbor Fund reserve and spend it on projects council members feel are more urgent, such as street and drainage projects or repairs and expansion at the city hall/civic center complex.
The council meeting to approve the tax rate and the budget is at 5 p.m. in the council chamber.
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