Property tax-increase proposed for Tyler residents

Published: Aug. 13, 2013 at 8:03 PM CDT|Updated: Oct. 13, 2013 at 8:17 PM CDT
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Tyler residents could be facing an increase in property taxes.

The city manager, Mark McDaniel, is proposing a 1.23 cent increase in the property tax rate for the 2013-2014 fiscal year.

It is part of a budget proposal McDaniel announced Wednesday at the city council meeting.

A 1.23 cent increase in the property tax rate would bring the rate to 22 cents per $100 valuation.

So, if you have a $150,000 home, the increase for the entire year would be $18 .45.

An increase McDaniel said is necessary.

"When you look at how you are funding our services through basically savings, that's not a good long-term strategy for good, physical health," McDaniel said.

He said the money is also needed to properly fund deferred maintenance, staffing and equipment as well as help with the looming increases in health funding.

City officials added that in the past few years, the property tax revenue has become much smaller in comparison to the overall budget, resulting in a  lack of diversification in revenue sources.
"It's not going out there and completely trying to go back to pre-recession, that's just not going to happen. We are living in a new normal where we are going to have to live with limited resources. So, I view a lot of what we are doing as a one time catch-up. Hopefully we will have some more positive growth, but you know, we don't have a crystal ball," he said.

However, McDaniel said the rate is comparably low when looking at other cities around the same size as Tyler.

But It is still an increase, and city officials are asking for the community's input having now announced the proposal.

"I'm not sure what the reaction will be, but we will be prepared to answer questions and we should be. You know, they are tax dollars and we want to be responsible for those and I think we will have answers."

Two public meetings for community input on the budget will take place at Tyler City Hall located at 212 N. Bonner Avenue.

The meetings will be at 9 a.m. on Wednesday, August 28 and at 9 a.m. on Wednesday September 11.

McDaniel said the final adoption of the budget is scheduled for September 25.

Press Release From the City of Tyler:

TYLER, TX - Tyler City Manager Mark McDaniel presented his proposed 2013-14 budget to the City Council Wednesday morning, calling it a responsible restoration budget.

"Because of the recession of the last four years, City staff has done everything possible to cut spending to keep the property tax rate flat (and even lowering the rate in 2012) for our citizens," said McDaniel. "With strong signs of a recovering economy, we must now take steps to restore funding for our core functions. We cannot count on use of savings any longer to fund costs that reoccur every year."

Tyler has the lowest municipal property tax rate in the State of Texas among cities with more than 16,000 residents. In some cases it is as much as four times lower than communities of comparable size.

"While we have been successful in controlling costs and capitalizing on our efficient practices, we must also continue to provide quality services to our citizens and ensure the City is prepared to meet citizen expectations for service levels," added McDaniel.

McDaniel is proposing a 1.23 cent increase in the property tax rate for fiscal year 2013-2014, bringing the rate to 22 cents per $100 valuation. On a home valued at $150,000, the amount of increase for the entire year would be $18.45. This is compared to the City of Waco with a tax rate of 78.6 cents per $100 valuation; Denton is 68.9 cents, Killeen is at 74.2 cents, and Longview is 48.34 cents, according to information from the Texas Municipal League.

In 1994, Tyler had a property tax rate of 55.36 cents; the rate has decreased more than 60 percent even in the face of steady growth in population as well as in the physical size of the community. The number of City employees has also decreased from 899 in 1984 to 765 in 2013. Data from the International City Managers Association indicates that the average number of city employees per 1,000 population is 9.9; Tyler is at 7.65. In the last four years, 22.5 positions were permanently eliminated, while approximately 140 were frozen at the height of the recession.

"In the mid 80's the City had 12 employees for every 1,000 citizens and a tax rate of 58 cents," added McDaniel. "Today that ratio is 7.65 employees to 1,000 citizens with a tax rate of 20.77 cents and no general obligation debt, all without decreasing service levels. We have been able to enhance our productivity through programs that engage our employees to do more with less, including Business Planning, Called to SERVE Internal Communications, City University and our incredibly successful Lean Six Sigma Program."

The City's Lean Six Sigma program was launched in 2009 and has saved the City more than $3.7 million. To date, 73 projects have been completed by City employees trained in the methodology.

Property taxes make up 25 percent of General Fund revenues – which provide for public services such as Police, Fire, Library, and Parks and Recreation. The majority of General Fund revenue comes from the one percent sales tax, with the balance coming from franchise fees, fines and other revenue sources.

"When homeowners pay their property taxes, only a little over 10 percent is for the City," said McDaniel. "The other 90 percent goes to Tyler Independent School District, Smith County and Tyler Junior College."

McDaniel explained that the need for the increase is based upon several factors including:

• The City's fund balance reserves cannot continue to fund recurring items on an extended basis – current revenue should fund current expenditures;

• The need to properly fund deferred maintenance, staffing and equipment on a pay-as-you-go basis;

• Looming increases in healthcare funding due to inflation and the Affordable Healthcare Act; and,

• Property tax revenue continues to decrease as a percentage of the total City budget. The result is a lack of funding diversification and an over-reliance on sales tax collections, should this trend be sustained.

"My job as City Manager is to make recommendations to the Council that are in the best management and financial interests of the City, based upon my 25+ years of city management experience," added McDaniel. "I feel that it is incumbent upon us to put forth a restoration budget that ensures long-term fiscal health and positions us to continue to set the standard for performance excellence in local government."

Examples of items that require ongoing funding include fire trucks, police and fire software, street maintenance, traffic signals and parks equipment.

Fee adjustments in the General Fund are minor and include an increase of $25 for non-resident membership fees at the Library, an increase in the overdue fines as well as an increase in the per transaction free for non-resident borrowers. Fees at the Glass Recreation Center will go up to $30 year for residents and up to $50 per year for non-residents. This additional revenue will help directly offset operational costs for these program areas. The Police Department will also raise alarm permit fees from $30 to $50 per year.

Efforts to retain the City's trained workforce include a 4 percent increase in pay for civil service employees (Police and Fire) and a potential 0-4 percent increase for other staff, based upon performance. Department leaders would be eligible for up to a 3 percent increase dependent upon their performance.

Effective Jan. 1, 2014, City employees and retirees who participate in the health insurance buy up plan will see between a $62 and $138 per month increase in their premiums as well as a $5 increase for co-pays on generic prescription drugs. Additional health insurance plan adjustments are under consideration as well in order to curb costs.

In the Utility Fund, a five percent rate increase for sewer service is programmed – all driven by needed capital improvement projects. This increase will help pay for plant and sewer collection improvements in the coming year, and beyond, on a pay-as-you-go basis.

"Even with the proposed increase in sewer services, Tyler still has one of the lower rates in the State of Texas for a city our size," said Managing Director of Water Utilities Greg Morgan. "Tyler's new combined rate would be $60.94, while cities of comparable size have rates as high as $92.95."

For the average user of 10,000 gallons per month, the cost increase is approximately $1.35.

No increase in Solid Waste fees is proposed.

Opportunities for public input on the budget are available by attending one of two meetings at Tyler City Hall, 212 N. Bonner Ave. on the following dates:

• Wednesday, Aug. 28 at 9 a.m.

• Wednesday, Sept. 11 at 9 a.m.

Final adoption of the budget is scheduled for the Sept. 25 meeting that is held at 9 a.m. at Tyler City Hall.