Amarillo City Council, in the absence of Mayor Ginger Nelson, voted 3 to 1 to set the city’s top tax rate to be levied for the city’s next budget at a rate of 0.49086, the Council member Cole Stanley being the only dissenting vote during Tuesday. Meet.
This maximum tax rate represents an increase of 9.68% over the previous tax rate of 0.44334, which equates to an additional increase of approximately $48 per year in taxes for every $100,000 in value of a house. The increase in property values caused the effective tax rate to drop from 0.44 to 0.41 to collect the same amount of income. With the tax rate increase, the city would gain $12.5 million to pay off the outstanding debt.
Laura Storrs, Deputy City Manager and Chief Financial Officer of Amarillo, explained the reasons for the property tax increase and how the maximum rate was calculated. During her presentation to the city, she pointed to rising fuel costs as well as the addition of officers and firefighters to serve the city’s growing population.
Showing a comparison of rates with other Texas cities of varying sizes, Storrs showed that Amarillo’s tax rates were relatively low compared to many other cities in the state. She also presented a graph showing that Amarillo’s tax revenue was not significantly higher than that of other comparable cities.
Storrs explained how the city’s outstanding debt influenced the city’s proposed top tax rate.
“The other part of the rate is going to fund the outstanding debt that is backed by property taxes; that amount increases by about eight cents this year,” Storrs said. “So with that, there were a couple of new projects that the board approved last year, and that’s going to fund those new projects and all those pending projects from previous boards have been approved as well.”
Asked by council member Stanley what would happen to the increased taxes collected if the civic center project were to be rejected in upcoming litigation, Storrs said the money could be used to repay other debt issues, but not future debt issues. This could save taxpayers money overall by paying off outstanding debt sooner.
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“If council goes ahead with a property tax rate, approving a property rate that includes the tax rate to cover the first debt service payment on the civic center project and for any reason, this project is delayed, this money collected from property taxes can be used to pay off outstanding debts that have already been backed and approved by City Council to be funded through property taxes,” Storrs added.
At the council meeting, Stanley argued that the economic downturn many are currently experiencing is not the time to raise property taxes. He was also concerned that the Amarillo Civic Center project, which has been approved by council but is still in litigation, could be included in the debt to determine the maximum tax rate.
“We are watching the economic slope and we are watching things change. I watch out for my taxpayer and going into a recession here is not the best time to raise taxes,” Stanley said.
During the meeting, the issue was discussed that the measure was passed by the council that there is a need to fund the project as it is an approved debt. Stanley rejected this idea, stating that since this action would not be formally undertaken until ongoing litigation approves the project, it should not be included as debt for budgetary considerations at this time.
Stanley said his problem was on the side that it was only about debt and service and had nothing to do with maintaining and running the budget.
“I am in favor of what they have presented for the additional fire, police and other needs we have in the city. But on the other hand, it’s a tax increase that’s burdened right now,” Stanley said. “We have a debt which is included in the budget which has not been published. My problem is with the INS side. It concerns only the debt and the service; it has nothing to do with the maintenance and operation of the budget. … But on the other hand, it is a tax increase that is being burdened at the moment. Why do we tax our taxpayers in advance?
He said he was not at all comfortable with raising the top tax rate to cover future debt that was still in dispute.
Stanley debated that if the Amarillo Civic Center project is allowed to go ahead, the council could act when the time comes and work with Frost Bank, the financier of the proposed project, to structure loan payments to structure in the coming fiscal year rather than the year 2022-2023. When asked about it, he was confident that the bank would work with the city if necessary to keep the financing structure in place, just with a delay in payments.
When asked after the meeting why he objected to the maximum rate, Stanley was unconvinced that the additional funds allocated to pay the civic center debt would be used in the interest of ratepayers if the judge ruled against it. the city on the project.
“Historically, tell me once we lowered your tax rate as a city,” Stanley added.
Stanley said if the civic center project is allowed to go ahead, then the city will structure the debt once the loan is completed.
“If this thing gets delayed until November, well, we’re going to structure this debt without payment until fiscal year 2023-24,” Stanley added. “I sincerely believe that Frost Bank will be willing to do this. Currently, the debt terms are not valid as we did not close in June as expected.
He said if the civic center project is green lighted to move forward, the city can treat it like any other additional debt that doesn’t have to be in the city’s current budget. He cited the City Hall project as an example of this type of debt issuance.
According to the city, the current top tax rate will result in Amarillo residents seeing less than a 2% increase in their total tax bill and residents age 65 and older seeing no increase.
Going forward, first reading and voting on the proposed tax rate will take place on August 16, with second reading and voting on August 19.