For the second time in as many years, property owners in Henrietta face a hike in the city’s ad valorem tax rate, approved during Monday’s meeting of the city council.
Aldermen also approved a bare-bones budget of $2.8 million in expenditures.
Property owners will be taxed 77.89 cents per $100 in value for fiscal year 2012, 2.89 cents more than the 2011 rate. The rate is designed to build up reserve funds for the city, which have deteriorated to nothing over the last few years.
“We have no reserves, and we are trying to get to a place where we have reserves,” said Alderman Howard Raeke during the public hearing portion of the meeting.
Mayor Rob Robinson pointed out a chart in the City’s budget proposal outlining the history of taxable values in Henrietta and the tax rates approved in corresponding years. Henrietta’s values grew at a steady clip from 2001-2010. In 2001, properties in the city were valued at a collective $71.3 million. By 2010, the number had grown to $108.9 million. Meanwhile, the tax rate in 2001 was 63 cents per $100 in value. The tax rate dropped or stayed the same over the next seven year until, in the 2008-09 fiscal year, it dipped to 52.79 cents per $100.
“In 2001 through 2008, when those tax rates were going down, what was happening is the city was living off its reserve,” said Robinson.
In 2010, the city’s valuation dropped by $817,590 to $108.1 million. This year, the collective value fell another $72,120 to $108.08 million.
Of the property tax rate, 26 percent will be used to pay debt obligations on a water and sewer infrastructure loan obtained in 2010 for improvements and repairs to the water and waste water treatment facilities. The city will be required to make payments on the loan in February and August of 2012, totaling $216,169.50. They will be the second and third payments on a 30-year, $3.25 million loan.
Also affecting the tax rate in Henrietta is a deficit in sales tax revenues as compared to other cities in the state. On average, Texas cities make approximately 28 percent of tax revenues through sales tax. Henrietta collects only 15 percent of its tax revenues from the sell of goods.
In a budget session last week, the council discussed raising the the tax rate to as much as 79 cents per $100 value, but chose not to do so. The effective rate – required to fund make the city’s budget break even, and not including debt obligation – is 75.116 cents per $100. The rollback rate, or the maximum amount not subject to a repeal by voters, is $88 cents per $100 in value.
The budget includes a 3 percent raise for city employees, who did not receive an increase in pay last year.
The rate will increase the city’s property tax revenues by $28,848. With total revenues and cash balance forward for fiscal year 2011-12 estimated at $3.017 million, the city could see a carryover balance of $149,742, said City Administrator Kelley Bloodworth in an overview of the budget provided to the council. The goal for the city is to build a reserve large enough to carry on normal operations through a three month period.