Waxahachie considering 3-cent tax rate drop. But the bigger relief may come the following year

Chris Roark, [email protected]

The city of Waxahachie is proposing a 3-cent tax rate reduction for the upcoming fiscal year, and it’s considering options for an even noticeable savings a year later.

During a council work session Thursday, Chad Tustison, the city’s director of finance, said the city is proposing a tax rate of 63 cents per $100 valuation. This would be a decrease from the current rate of 66 cents, and it’s a steeper drop from the rate that was discussed earlier this summer of 65.5 cents.

Tustison said property values ​​that came in higher than expected is one reason the city felt comfortable proposing the rate of 63 cents.

The city’s taxable value increased from $3.96 billion in fiscal year 2021 to $5.17 billion in fiscal year 2022, a 30-percent increase. Of that increase, $0.88 billion, or 22 percent, are existing values, and $0.32 billion, or 8 percent, are new improvements.

The tax rate broken down would mean 38.55 cents would go toward the maintenance and operations (M&O) side, 22.35 cents would go to debt service and 2.1 cents would go to the library.

Last year, under the tax rate of 66 cents, the owner of a $250,000 home paid $1,650 in city taxes. At 63 cents, owners of the same home would pay $12 less in city taxes if their property value increases by 4 percent, $20 more if it increases by 6 percent or $83 more if it increases by 10 percent, which is the cap.

But the 3-cent tax rate decrease would only be one factor in the overall tax bill. The city’s portion of the total tax bill is 31 percent while the school district’s portion is 54 percent, and the county’s portion is 15 percent.

While council members were pleased with a potential tax rate decrease, they also discussed possibilities of helping residents even more in the future.

Currently the city offers an exemption of $30,000 for residents ages 65 and older. The council asked the staff to look at the impact of increasing that, saying that could have a larger impact than the tax rate reduction.

“Especially those on a fixed income,” Councilman Patrick Souter said. “The (cost of living) for someone who’s living on social security is not keeping up with inflation, taxes and everything else. Raising that may actually help those who truly need it most.”

Councilman Travis Smith agreed.

“This group doesn’t see any benefit if we lower the tax rate,” Smith said. “If we’re really going to try to help those on a fixed income, it’s right here and not with the tax rate.”

Waxahachie also offers an optional local tax ceiling, or tax freeze, for those 65 or older or disabled, and they must be a homestead resident to qualify. The tax ceiling is the amount a resident country in the year they qualified for the exemption. Tustison said only three of Waxahachie’s comparable cities offer that exemption.

The council also discussed implementing an optional homestead, which only two of Waxahachie’s comparison cities offer. The homestead exemption removes part of the value of a homeowner’s residential property from taxation.

Tustison said the city can go up to 20 percent of the appraised value on the homestead exemption. He showed a 1 percent exemption in which homeowners would receive a minimum of $5,000 under state law regardless of the percentage and the value of the home.

So under a 63-cent tax rate, the minimum homestead exemption would drop the city tax on a house valued at $250,000 by $31.

These exemptions must be adopted by July 1, so the earliest they could be in place would be for the 2023-24 fiscal year.

Tustison also briefly discussed the proposed $115 million budget. Of that, $60.1 million is the general fund budget.

In the general fund budget the city is projecting revenues to be $57 million, core expenses at $47 million and service enhancements at $13.1 million with a projected ending balance of $20 million, which is 35 percent of budgeted revenues.

The City Council will consider the proposed tax rate Aug. 15. On Aug. 30 the council will have a public hearing on the budget and the tax rate. The budget and tax rate adoption are set for Sept. 6.

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