Missouri City may raise tax rate slightly
City Council members in Missouri City have scheduled an Oct. 5 vote on a proposed 1-cent increase in the 2009-10 property tax rate, trading additional cuts in city spending to allow for quicker action on capital construction projects.
The proposed tax rate is 52.8 cents per $100 valuation for the budget year that began July 1. That compares to last year's rate of 51.72 cents.
The new rate is in line with what was discussed during budget workshops earlier this summer, but with more money for debt service on voter-approved capital improvement projects such as streets, drainage and City Hall renovations.
City Manager Frank Simpson said he wants to take advantage of current low interest rates and a drop in construction costs to move ahead with those projects.
The proposed tax rate includes less than 2 cents extra for debt service, but a drop in the portion of the tax rate that goes for General Fund expenses of less than a penny.
So we can move faster with the CIP, we're tightening our belts at City Hall," the city manager said. It's a good time to do projects."
Simpson said he will trim an additional $750,000 previously budgeted for 2009-10, including leaving some nonessential positions vacant, reducing the city's contingency fund by $200,000, and trimming travel, training and conference line items.
The city's latest contract for employee health insurance premiums also rose by 6 percent less than the industry average of more than 10 percent saving the city another $100,000, the city manager said Sept. 21.
The $750,000 cut comes on top of a 2 percent reduction in maintenance-and-operation spending the council already had approved for the new budget year.
Final adjustments and approval of a tax rate follow the city's recent receipt of certified tax rolls from Fort Bend County and Harris County appraisal districts.
If the city manager's proposal is adopted, annual city property taxes on a home valued at $200,000 would increase from $1,034.48 to $1,056.
Simpson linked his recommendation to step up the city's capital improvement program to the Sept. 21 sale of $46.6 million in tax and revenue certificates for a new surface-water plant.
The city's financial adviser Joe Morrow of First Southwest Co. said a favorable interest rate of 4.275 on the debt would save the city millions over the next 25 years.
When coupled with better-than-expected bids on initial construction at the city's new plant near Sienna Plantation, the bond sale means lower-than-anticipated water rates for Missouri City customers down the line, Simpson added.
Earlier this summer, the city received 18 bids on construction of raw water reservoirs at the new water treatment plant site, with the low bid coming in at roughly half the city's multimillion-dollar estimate.
With good planning and some good fortune we will have very, very competitive water rates in the Missouri City area in years to come," he told the council.
Like other cities in the region, Missouri City is under state mandate to reduce its dependence on groundwater pumping, which leads to subsidence.
Missouri City has teamed with other communities and utility districts in the area to build a new water plant to treat Brazos River water, and has already begun to raise rates to pay for the multimillion-dollar construction.
The Sept. 21 sale of $46.595 million in combination tax and revenue certificates of obligation earned the city an AA-/stable" rating from Standard & Poor's and an interest rate of 4.275.
According to Morrow, the rating agencies were impressed with the city's very strong financial position, coupled with good financial management practices."
Morrow said interest rates had dropped enough in recent months alone to save the city $4.3 million in interest over the life of the bonds.
The sale went very well," said Morrow, adding that the rating agencies were impressed with the city's foresight" in purchasing an option on Brazos River water more than a decade ago. Those are things that are going to benefit the city for many years to come."
Standard & Poor's AA-/stable" rating is the same it has assigned to other recent city bond sales, said Finance Director Wesley Vela.
The S&P report stated: In our view, the city's high overlapping tax rates, combined with high overall debt burden from the overlapping school district and many inside-city municipal utility districts (MUDs), preclude a higher rating."
The report noted that the city's tax base was expanding and diversifying, and that its tax rate was stable," but that the overall tax burden can be well in excess of $3.70 in some parts of the city."
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