City Council to Consider Proposed 2012 Tax Rate as Budget Workshops Conclude

Sugar Land, TX - City Council recently voted to consider a proposed 2012 tax rate of 30.895 cents, an increase to average tax bills of $21 per year over 2010 ($1.75 per month) and $5.25 more than the 2009 average tax bill.

Budget workshops have been held during the past three weeks. Public hearings on the proposed tax rate are scheduled for Aug. 28 at 5:30 p.m. and Sept. 4 at 6 p.m. at Sugar Land City Hall, 2700 Town Center Blvd. North.

Sugar Land's Financial Management Policy Statements provide direction to base the City's budget on revenues equal to the effective tax rate plus 3 percent.

The proposed tax rate is calculated to be the City's effective tax rate plus 2 percent. The 2012 tax roll provides a 1 percent increase from revaluation, so a 2 percent increase over the effective tax rate nets a 3 percent increase in the average residential tax bill.

Making a one-time budget reduction may appear to provide an easy way to avoid a tax increase; however, revenues needed to maintain existing service levels and quality of life standards would not be available every year.

"Future City Councils would be faced with the difficult decisions of deciding what to cut next year and the year after that," said City Manager Allen Bogard.  "The cumulative impact of not growing tax revenues by 3 percent per year is a loss of $9 million in current and future tax revenues that could support capital improvements and operating needs to sustain current levels of service."

City Council has historically kept the tax burden low by limiting the tax rate and utilizing the homestead exemption to offset increases in valuation. The target for annual tax bill increases has been an average increase of 3 percent.  Some years were higher and some were less, but from 2000-2009, the average tax bill increased by 3.4 percent annually.

During the last two years, residential tax bills have decreased due to declines in property values and the decision to keep the tax rate flat. Average tax bills in 2010 and 2011 were both less than the average tax bill in 2009.

"The City recommended and City Council chose to maintain the existing tax rate and not adjust the tax rate to offset losses in taxable value during the economic downturn," said Bogard. The budget has significant reductions to offset the loss of tax revenues; however, the loss of revenues limits the City's ability to meet the current and future needs of the community.