Nichols: A closer look at College Station’s proposed property tax rate increase

By John Nichols, Place 4 Councilmember

The City of College Station has proposed a property tax rate increase as part of its Fiscal Year 2015 budget plan. I’ve been asked by several citizens to provide further background on this proposal and the rationale for such an increase. This blog reflects only this council member’s analysis and views.

In College Station, property taxes ─ after covering debt service ─ account for about 27 percent of our general revenue income, which will total about $61.9 million this coming fiscal year. General revenue provides the funds for public safety (police, fire, and EMS), street maintenance and reconstruction, parks, library and other general administration. Sales tax revenue is expected to contribute 41 percent of general revenue in the coming year. Other sources are franchise fees, fines, licenses, transfers from utilities, etc.

Tax InfographicThe FY 2014 property tax rate is $0.425958 per $100 of assessed valuation. The proposed rate is $0.4525, an increase of about 2.6 cents that is expected to generate about $1.6 million in new revenue to the general fund. For the owner of a $200,000 home, this would mean an increase of about $53 per year, or $4.42 per month.

Keeping up with growth, inflation

Several main drivers led to the proposed tax rate increase. The city endeavored to maintain or reduce the property tax rate during the recent recessionary period. Since 2010, the effective tax rate has been adopted each year, reducing it from $0.4394 in FY 2010 to $0.425958 in FY 2014. The effective tax rate is the rate needed to raise the same amount of revenue from the same properties in the current year compared to the past year.

New property brought onto the tax rolls helps account for the increase in city expenditures associated with growth. While it’s recognized that appraisal value for existing properties increased enough to just offset the reduction to the effective tax rate, no consideration is given to inflation in the cost of doing city business during this time.

To better understand this trend, I’ve analyzed the property tax income to our general fund since 2010, the last time the tax rate was held constant. Since then, total property tax revenues to the city have increased by 7.75 percent — from $24.523 million to $26.423 million — including revenue from new and existing properties.

During this time, the cost of police cars, fire equipment, street paving materials, and everything else the city purchases has increased moderately. Inflation has eaten away the purchasing power by more than 7 percent in that time period.

In addition, our August population estimate of 101,648 marks an 8.3 percent increase since 2010. The addition of almost 8,000 people has increased demands on city services ─ from public safety to streets and traffic management to parks ─ all of which are funded by the general fund.

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Nichols: Managing the impact of neighborhood rental properties

For-rent-sign[1]The City of College Station is experiencing almost unprecedented growth stemming largely from the expansion of enrollment and research and development budgets at our institutions of higher education. These changes bring many opportunities for business development, employment, new retail experiences, and expanded regional and national recognition.

They also bring many challenges. We live with, and try to adapt to, the pressures of increasing traffic congestion and the transition of many commercial and residential neighborhoods.

The rapid expansion of rental properties into neighborhoods zoned for “single families” and long thought to be designed mainly for traditional owner-occupancy is the focus of intense current discussion by many residents and rental property owners. In College Station, the definition of permitted occupancy in what are designated as “Suburban Residential” and related similar zones is “no more than four unrelated individuals.”

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