The Leander City Council unanimously approved its $168.89 million Fiscal Year 2020 budget Thursday.
The budget is about $10.22 million smaller than the current city budget, and is supported by a property tax rate of $0.541867 per $100 of taxable value, which is $0.01 lower than the previous rate.
It is the seventh year in a row the tax rate has been reduced in Leander and the third year in a row the adopted rate has been equal to or less than the effective rate. Notably, since the effective rate is a term for the rate adjusted for changes in property values that the city could adopt to raise the exact same amount of money as the prior year, fiscal hawks often look at setting tax rates below the effective rate as the most direct way to demonstrate a reduction in the size of government.
Leander Mayor Troy Hill said he was proud the council’s accomplishments, arguing it is important that the city remain competitive in its tax rates compared to other cities. He also said they were excited to be able to put money back into taxpayers' pockets.
Leander is one of the few regional cities to set their rate below the effective rate. Many cities throughout Texas are seeking an 8 percent increase this year in the revenues they raise - the maximum allowed by the state without requiring it be approved by voters on an election ballot. A new state law taking effect 2021 will lower the threshold to 3.5 percent. The cities have argued having to have the elections eats into the money they seek to raise, even if the measure is approved, because adding it to the ballot and promoting it costs money.
Hill said he considers those cities irresponsible for raising “just because they can” for potential costs that haven't occurred yet.
“What are they going to do? Give the money back if (the cost) doesn’t happen?” Hill asked.
He argued it is the responsibility of cities to run an efficient government and “have those hard conversations if problems does occur.”
Leander’s taxable values has been rapidly growing, increasing $865 million, or 15 percent, this year to a total of $6.346 billion in taxable value. Approximately half of that total is due to new growth in the city.
Despite the reduction to the budget, there are number of notable additions and projects in the budget, including:
•Adding 24 new city position in departments ranging from Police to Fire to Public Works to meet the demands of Leander’s rapidly growing population,
•$4.3 million for the San Gabriel Parkway Pump Station project,
•$3.8 million for the Brushy Creek Wastewater Plant expansion project,
•$1.2 million renovation of Fire Station No. 2 to accommodate a second Williamson County EMS station, the project will draw $800,000 from these funds plus $400,000 allocated from last year's budget,
•$350,000 for regional pond improvements,
•$300,000 to update water models in the Upper Brushy Water Control and Improvement District (WCID) watershed, and;
•$269,000 in traffic control improvements.
In other budget updates, the city reported its Crystal Falls Golf Course is projected to be revenue neutral after providing an estimated 29,100 rounds of golf.
Additionally, the city is estimating a 14.4 percent increase in debt service supported by property tax revenue, as well as a 7.3 percent increase in debt service supported by utility fee revenue, in the proposed budget. However, the city estimates a net decrease in utility debt service by 2021 as existing debt gets paid off.
Despite the council reducing the tax rate, some local residents may see a larger tax bill due to the complexities of the tax bill, such as the Leander ISD school district, the county and other government entities taking up a substantial percentage of the total bill, and the explosive population growth in Leander and throughout Williamson County.
Notably, the growth has resulted in a massive surge in property values as the region becomes more desirable. Cities and homeowners alike typically like growth in population size and property values because it allows cities to raise the same amount of funds with a lower rate due to the cost being spread amongst more people. However, if the increase occurs over a short, rapid growth period, some homeowner can struggle with their bill growing even when the city cuts rates – because their home is suddenly more valuable and can be taxed for more money.
For example, the average Leander home in Williamson County last year was valued at $265,234, resulting in a city tax bill of $1,464. If the home’s value remained the same this year, the average tax bill would be about $28 less under the new rate.
However, the average Leander home in Williamson County this year is valued at $281,256, resulting in a city tax bill of $1,524. If a home’s value increased from $265,234 to $281,256 this year, the average tax bill would be about $60 more under the new rate.