By George Slaughter
The Katy City Council Tuesday afternoon began its process of approving a proposed property tax rate of $0.447168 per $100 valuation and rescheduled the public hearing on that rate to 4 p.m. September 23.
The proposed rate is a decrease from last year’s $0.48 per $100, in support of a proposed $32 million city budget for 2020-2021.
The overall budget, at $32 million, is a slight decrease from last year’s budget of $32.2 million.
At a recent budget workshop, City Administrator Byron Hebert said the city receives 83% of its revenues from three sources: property taxes (41%), sales taxes (37%), and franchise taxes (5%). Other sources include services (8%), fines, forfeitures, and fees (6%), interest in other sources (2%), and grants (1%).
Officials expect $13.1 million in property tax revenues, a 23.6% increase from $10.6 million last year. This revenue increase, despite the lower proposed rate, comes as the appraised value within the city increased by $306 million thanks to companies such as Amazon, Costco, and Southern Glazier, along with new residential development in Katy.
Recently passed state laws, intended to reduce property taxes on citizens and businesses, required the city to recalculate its property tax rate. The new rate is calculated by adding three rates:
- The no-new-revenue tax rate, which is the rate charged to get the same amount of revenue as last year. In this case, the rate is $0.349394 per $100.
- The rate needed to cover debt ratio pay principal and interest. In this case, the rate is $0.082227 per $100.
- The “de minimis” tax rate, which for cities such as Katy with a population of less than 30,000, is the city’s ability to capture the first $500,000 in property tax revenue to its general fund for maintenance and operations. In this case, the rate is $0.015547.
Officials expect $13.6 million in sales tax revenue, a 10.5% decrease from $15.2 million last year. Of this figure, $10.3 million is general sales tax and $1.4 million is sales tax collected through the Katy Mills Mall. The city includes mixed beverage and bingo taxes, as well as franchise taxes, in its overall sales tax revenue figure.
The proposed budget has a 39% drop in sales tax collected through the Katy Mills Mall. Sales taxes are down nationally due to both the coronavirus pandemic and online retail, both of which go against in-store retail. Katy officials said they will monitor and update the figures as the pandemic response plays out.
The city budget calls for expenses to cover public safety (58%), general government operations (24%), streets (8%), debt service (6%), and other services (4%).
Hebert said Mayor Bill Hastings had five goals for this year’s budget: 1) Continue to provide excellent service and to residents and businesses, 2) Keep all city employees employed, 3) No healthcare interruptions, 4) Fully fund retirement, and 5) Try to get to the pre-coronavirus budget.
The council is expected to approve the budget this month, which would take effect next month.