The city council voted 5-0 (with two absences) today to guarantee the property tax will not increase any higher than the current $.5848 per $100 of taxable valuation while giving itself wiggle room to actually lower the rate by as much as a penny, a reduction proposed by the city manager, by the time they get around the passing the budget Sept. 6.
At the same time, no one on the council (during a discussion when all seven members were present) voiced any objection to the establishment of a stormwater utility and a few even suggested the city’s proposed fee $3-per-month fee to be paid by homeowners to fund the utility should be increased to as much as $5 a month.
And, the council warned, sometime during the next 10 years, the price of delivering water is going to drive up the water rates residents pay between $21 and $25 month.
Overall, however, council members seemed pleased with the city manager’s proposed budget suggesting, at least at today’s workshop, only minor alterations.
Mayor pro tem Damon Fogley and council member Daphne Tenorio had previously planned engagements and were forced to leave Saturday’s council workshop before the vote to set the maximum tax rate was taken.
City Manager Scott Sellers’s proposed budget for fiscal year 2016-17, which he made public a week ago yesterday and outlined to council members at today’s workshop, specifically called for a one cent decrease in the property tax rate. However, sometime within the last 24 hours, every council member received an e-mail from the Kyle Police Association asking the council to keep the tax rate at its current level and to use the $200,000 in revenue that rate would generate to align the department’s compensation package to a level that’s closer to what is offered to police officers in San Marcos. In effect, the council decided to delay an actual debate on that request until a later budget meeting but voted to set the maximum allowable tax rate at $.5848 simply to allow that later discussion to take place. Personally, my feeling is that when all is said and done, the actual tax rate for FY 2016-17 will be lower than the current rate by anywhere from one-half to one full cent.
In fact, council member Travis Mitchell initially wanted to set the maximum rate at a half-cent below the current rate today to send a signal to residents that tax rates would definitely be lowered and that the police association’s request could still be achieved by a combination of a half-cent increase over Sellers’s proposed rate combined with the elimination of certain positions. While some on the council, notably Shane Arabie, liked Mitchell’s idea, they also believed his aims could still be achieved by setting the maximum rate today at $.5848 with the option of then lowering it before the final budget is adopted.
Under Sellers’s proposed budget, residents would have $3 a month stormwater fee added to their utility bill (water, wastewater, trash pickup, etc) while commercial customers would pay an amount proportional to the amount of impervious surface their property contains. This would result in commercial customers being forced to pay almost two-thirds of the total stormwater fees, a proportion almost directly opposite to the commercial/residential ratio in property taxes.
For example, Stormwater Management Plan Administrator Kathy Roecker told the council today that while residents would pay $3 a month under Sellers’s proposal, Wal-Mart’s stormwater bill would be around $1,140 a month.
"The main reason why I think it’s important for us to do an adjustment factor for commercial is because something that is written into the stormwater plan is that we need to start trying to focus on incentivizing what they call lower-type development and green infrastructure," Roecker said. "If a developer is coming in and they actually can see if we implement some of these things it benefits the city because it reduces runoff. So if they put in a green roof, or a rain garden or use other emerging technologies, their rate is going to go down. So that is going to help us incentivize the developers to look at some of this. Right now, there is no incentive."
Roecker said the proposed fee structure would provide $1.08 million to the utility per year.
Tenorio questioned whether that was enough to really get the program up and running. "If you had your dream system," she asked Roecker. Then she paused and said "I want people to see what they are spending their money on and I want people to realize the money is being spent for their benefit. In order to make this a successful venture, I would like to see what you really need to get it done."
After noting San Marcos’s stormwater fee is $5.20, Sellers said "If we went to $5, we would generate $1.8 million. That is really a realistic number where we need to be."
Tenorio argued she would rather see the fee set at $5 now and "not have to come back next year and ask our citizens to pay $2 more. And I don’t want to reduce the tax rate one penny this year and then come back next year and say I need five more cents" to fund the stormwater utility.
Sellers admitted the number of employees on the stormwater staff will have to increase at some point "but we figured we would work ourselves into that over several years."
"I just think if we’re going to do something, I don’t want to do bare bones," Tenorio said. "You start with it ready to go. I don’t want to set you up to fail."
"I would say I would want to take a strong look at the $5 rate," Mitchell said. "But I don’t necessarily think the additional $2 should go to recurring labor costs. I would advocate for $5, keep the overhead where it is, allow those folks (new employees) to come in, so that over time we can make these big addressments and then hopefully reduce the amount of that fee down the road. Start with a high end, low overhead to make capital improvement expenditure and then see that rate come down over time."
Assistant City Manager James Earp told the council if the fee was increased to $5 "that would allow you to fully fund the mowing of the right-of-ways, the equipment purchases that are needed to get the work done the right way. If you only have two people mowing the entire city, it’s difficult to get a high level of service."
No one brought up the costs of NPDES permitting or whether the city as a whole or individual businesses (such as car washes) in Kyle are even required to obtain NPDES permits.
Sellers suggested some residents should be compensated for paying stormwater fees by having to pay lower Homeowner’s Association dues because the HOAs will no longer, under this plan, be financially obligated to maintain the stormwater facilities on their properties. He said he plans to have conversations with HOAs to address this subject.
City officials said that while water and wastewater rates will not be raised as part of this year’s budget, the city is going to be obligated to repay HCPUA for Kyle’s share of the debt HCPUA must assume to finance a 40-mile pipeline to transport groundwater from the Carrizo-Wilcox Aquifer in eastern Caldwell County to the more populous areas of eastern Hays County. Because of this expenditure, Kyle water customers should expect rates to rise, on the average, between $21 and $25 per month between now and 2026. The question the council admitted it must decide at some point in the near future is whether to phase that increase over the 10-year period or wait until 2026 and then dump the entire increase on homeowners at one time.
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