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Despite repeatedly pointing out the effective tax rate previously published was incorrect, the Big Spring City Council voted 6-1 Tuesday night to approve first reading of the levy in an effort to meet the state-mandated deadline for having the fiscal element in place.
The council â€” with District 4 Councilman Bobby McDonald the lone dissenter â€” approved first reading of the proposed tax rate of 86.5043 cents per $100 property valuation, a rate that will likely leave the municipality with a budgetary shortfall estimated at $130,000 to deal with in the coming year.
According to City Finance Director Peggy Walker, a mistake made by the Howard County Appraisal District in accounting for the values of property appraisals currently being protested, the rate that would bring in the same amount of tax revenue collected last year â€” known as the effective rate â€” is estimated at 88.8275 cents per $100 property valuation, more than 2 cents higher than the proposed rate.
The $15,570,750 difference in protested values would drive up the effective rate to 88.8275 cents per $100 property valuation, according to Walker. Howard County Chief Appraiser Ronnie Babcock acknowledged the mistake during the council's Aug. 28 meeting and affirmed the published tax rate is not correct.
Walker said Tuesday night the effect the discrepancy will have on the 2012-2013 budget is hard to forecast and could be as high as the $130,000 estimates or considerably lower.
â€śThere's no way to pinpoint where we'll come out of this until we know what will happen to those protested appraisals,â€ť Walker said.
According to Walker, the real danger the tax rate gaff poses is to fiscal planning for the 2013-2014 budget, when it could artificially drive the tax rate lower than it should be.
â€śIt won't call for any major changes to the 2012-2013 budget, just some adjustments to projected revenues,â€ť she said. â€śNext year, when we begin putting together the 2013-2014 budget, we'll have the necessary time to make the needed adjustments to keep this year's published effective rate â€” which, again, is incorrect â€” from impacting the tax rate for years to come. That could call for going above the effective rate by a few cents.â€ť
According to City Attorney Linda Sjogren, the state-mandated time table for cities to approve the tax rate for the coming fiscal year made it impossible for the council to adopt any tax rate other than the effective rate established by the appraisal district.
â€śWe're required to have the tax rate adopted by the end of September,â€ť Sjogren said. â€śFor the city to go above the published effective tax rate set by the appraisal district â€” whether it's correct or not â€” it is required to hold a number of public hearings. There is simply no way for the city to get those requirements completed in time.â€ť
McDonald said he voted against the tax rate because it was what his constituents asked of him.
â€śThere's no way I could vote in favor of a mistake,â€ť McDonald said following the meeting.
City officials said any budgetary shortfall created by the debacle would come from the city's reserve funds, which Mayor Tommy Duncan pointed out are ample to handle the fiscal strain.
The council also approved first reading of its 2012-2013 budget Tuesday, voting unanimously in favor of the fiscal plan.
Among other things, the budget features a pay raise for employees â€” the first in two yearsâ€” $500,000 for water line replacement, set-aside money to purchase property for landfill use and almost $4 million designated for water purchases. A public hearing regarding both the budget and tax rate held prior to their first reading yielded no comments from local citizens.
The council is expected to consider final approval of both the budget and tax rate during its next meeting, slated for Sept. 25.
Also during Tuesday's meeting, the council approved the emergency reading of an ordinance calling for the extension of the existing curfew for minors until Sept. 1, 2015. The council has approved similar extensions in the past, also for three-year periods.
The council voted unanimously in favor of the measure, which calls for all children less than 17 years of age to not be in any public place or the premises of an establishment or business between 11 p.m. and 6 a.m. the following day Sunday through Thursday and 12:01 a.m. until 6 a.m. on any Friday or Saturday.
Because the matter was considered on an emergency reading, it does not require a second vote.