It's time for public input as the City Council considers the 2008-2009 budget and tax rate. The proposed $134.6 million budget and our strategic budget can be found here. They're huge documents, so be patient as they download. For an overview, you'll want to read the Budget Message that starts on Page 4 of the budget document.
We face a challenge as the City develops its budget this year. We are confronted by a general economic slowdown while our population continues to grow. Because we have successfully diversified our economy over the past 15 years, the City can continue to provide the core operating services our citizens rely upon.
The City of Round Rock’s budget planning is affected to a large extent by Dell, since the company’s presence here has such a significant impact on our finances. Because Dell’s corporate headquarters and sales staff are located here, the City collects sales taxes on most of Dell’s Texas sales. For the past two years, though, Dell’s sales tax revenue to the city is down.
The City has managed its reliance on Dell in a couple of ways. First, through a policy that limits a specific portion of Dell revenue for day to day operations while providing the remaining funding for large projects and debt reduction. Second, through an economic development strategy that focuses on bringing dollars to Round Rock from sources outside our community.
The twenty-four month general decline in Dell’s sales tax revenue appears to reflect a long-term shift, not a temporary downturn as we have seen in the past. So, the City Council is now considering a gradual shifting from sales tax to the property tax in a manageable and affordable way to maintain quality levels of service.
So what does that mean to you? At the tax rate the City Council is considering, the owner of the average value home would see their tax bill increase by about $33 next year. That $33 will help us maintain current service levels while adding staffing to police and parks and recreation.
The tax rate currently being considered by the City Council is 36.5 cents, the same as last year, which translates into a City tax bill of $676.84 for an average value home. Note: The 36.5 cent tax rate is slightly higher than the rate shown in the proposed budget documents we link to above. The original proposed budget included no new employees and was balanced at the effective tax rate of 35.1 cents (The effective tax rate is the rate that would provide the same amount of revenue collected last year from properties on the tax roll last year -- it does not take into account new properties added to the tax roll this year).
The City Council at an Aug. 20 meeting voted to consider the slightly higher rate after much discussion about the impact of Dell's declining sales tax revenue. We'll continue to closely monitor sales tax collections as the City Council makes its deliberations on the final tax rate.
The first public hearing on the tax rate will be 5 p.m. Thursday, Sept. 4, in Council Chambers at City Hall, 221 E. Main St. A second public hearing, and first reading vote on the budget and tax rate, is scheduled for Thursday, Sept. 11, during the regular City Council meeting. A final public hearing and second and final reading votes are scheduled for the Thursday, Sept. 25, regular meeting.
That's a long post, I know, but budgets and tax rates are not simple
issues to explain. You can watch a video about the budget on our access channel, Time Warner cable 10, at noon, 2 p.m., 4 p.m., 6 p.m., 8 p.m. and 10 p.m., or online: Launch Video Player