City’s effective tax rate drops

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With department budgets stretched tighter and tighter for issues such as equipment maintenance, city leaders now must decide how to handle additional revenues that leaving the tax rate as it is — and going with a higher-than-effective tax rate — would bring.

The effective tax rate for Friendswood is .5914 cents per $100 valuation, while the current rate is .5970.

“The effective tax rate has gone down from the current tax rate, and much further down than we expected it to be when we were developing the budget,” City Manager Roger Roecker said.

If it is left as is, the extra funds generated could be used for street maintenance and repairs, he said.

City Council last Monday discussed but made no decision in directing staff to continue at the current rate or work with the effective one. The final budget and tax rate is scheduled to be adopted by the city Oct. 7.

Like most other cities, Friendswood has seen limited growth in property values since 2008, a trend that now appears to be reversing. Property taxes within the city for 2013 equaled $2.5 billion, an increase of $67 million over 2012. Of the difference, $52 million is related to new construction, with the remaining attributed to value increase.

If the city does decide to leave the tax rate as is, the result would be about $120,083, but two additional public meetings would be required by law.

The council differed in opinion on whether to leave the rate as is, or go with the effective – and lower – rate.

“It’s been an unwritten rule that we follow the effective tax rate for 11 years now,” Councilman Billy Enochs said. “I think we should stick with that policy. The effective tax rate pays the bills for us this year, but I think we do need to send the message that maybe next year will be the first year we have to look at our expenses or raising the tax rate to cover our expenses.”

If the city does decide to go with the current rate, public meetings will be announced and scheduled before the city’s Oct. 7 meeting.

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