CWS lowers tax rate after valuation jump

By Phil Reynolds

The Highlander

The City of Cottonwood Shores has kept the same property tax rate, 54.38 cents per $100 of property valuation, for three years. Now a 14 percent leap in overall valuation is forcing city council members to lower the tax rate to keep from facing the possibility of a rollback tax election.

That jump in property values – from $83,948,099 last year to $102,708,983 this year – caused the city’s effective tax rate to drop to 47.88 cents per $100 valuation, Mayor Donald Orr said after Thursday’s council meeting. In an over-simplification, the effective tax rate is the rate it would take to raise the same amount of tax revenue this year as was raised last year. Since property values skyrocketed, the rate needed to raise that tax revenue dropped.

Of the $18,760,84 diffeerence, only $3,775,398 is due to new construction, said Stan Hemphill, Chief Appraiser for the Burnet Central Appraisal District. That district sets property appraisals for Cottonwood Shores as well as all other governmental entities in the county, based on market values.

But like many things dealing with taxes, there’s a fly in this ointment.

State law says if a tax rate is more than 8 percent above the effective tax rate, a petitiion can be signed calling for a city-wide election over the rate. And 8 percent over that effective rate of 47.88 cents is only 54.23 cents per $100 valuation.

Orr said if the council passes a tax rate higher than that, and a petition is signed, by the time the matter gets through the election process the city would be halfway through its fiscal year, and faced with the possibility of having to roll its tax rate back to the lower amount.

“It’s not worth the risk,” Cuncilmember Roger Wayson remarked, and other council members agreed; they passed the 54.23 cent tax rate on first hearing Thursday, with another hearing scheduled for later this month.

At the same time, the council adopted on first hearing a 2018-2019 budget with general fund expenditures expected to total $1,030,846. That’s $107,567 more than the currently-budgeted genral fund expenditures.

The council has until Sept. 30 to get both the tax rate and the budget approved before the beginning of the new fiscal year, Oct. 1. That includes a special council meeting on Thursday, Aug. 30.