Rising costs compelled Cedar Park and Leander city staff to take cautious approaches to the 2011â€“12 budget, which resulted in no tax rate increase in Cedar Park and a 2 cent property tax rate increase in Leander.
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The two cities reported slight revenue increases, but Leander added 2 cents to its tax rate to relieve pressure on rising water utility rates. Cedar Park kept last yearâ€™s tax rate as it tries to position itself well for future growth and rising fuel and occupancy utility costs. The increase kept Leanderâ€™s tax rate among the highest in the area while Cedar Park stayed in the middle.
Cedar Park city staff avoided working many additions into the budget because of revenue constraints spurred by less-than-expected increases in property and sales tax collections. The increases occurred at a time when the cost of fuel and occupancy utility costs have also increased expenses, Cedar Park Finance Director Josh Selleck said.
Cedar Park kept a property tax rate of $0.493501 per $100 valuation. The stable tax rate means an increase for the average homeowner of about $10, resulting from average home values increasing by $1,930.
â€œBecause the economy kind of stagnated to some extent, this yearâ€™s budget looks very much like last yearâ€™s,â€ Councilman Lowell Moore said. â€œThereâ€™s not a lot of new money ... There wasnâ€™t a lot we could do beyond the things we had planned already.â€
The slight increase in property tax revenues occurred because many new properties were added to tax rolls, Selleck said.
Facing rising utility rates, Leander shifted some of the utility costs from utility bills and across the taxpaying base by increasing property taxes by 2 cents. The average Leander homeowner should expect about a $36 increase in property taxes for 2011â€“12.
â€œRaising taxes is always a concern during uncertain times, but we all worked extremely hard to make the impact as minimal as possible on our citizens,â€ Mayor John Cowman said. â€œI feel very comfortable with what we did.â€
A change in accounting practices necessitated the rate increase, Interim City Manager Robert Powers said. Each year, the city transfers money from the utility fund, which is funded by utility bills, to the cityâ€™s general fund. The transfer generally covers a percentage of costs from the general fund that pay for administration and operations overhead for the cityâ€™s utilities.
Leander began reducing the amount transferred in the last few years to ease utility rates, which have risen in the last two years. The city needed to increase the property tax rate to offset the change, Powers said.
The Cedar Park budget adds five positions: two civilian police positions and one civilian fire position; a traffic signal engineer, which is funded for a half-year; and a utility equipment mechanic. Other notable additions included a one-time $25,000 expense for new books and publications for the library and $28,085 for police officer fitness testing.
The Leander budget adds seven new positions, some of which are funded by sales tax increases and others by vacant positions. The seven positions are: a police officer, civilian police clerk, one maintenance worker each for public works and parks and recreation departments, a firefighter, a fire marshal and a fire training officer.
The city is also adding a framework for employee pay increasesâ€”pending the employees pass evaluationsâ€”that will allow staff with more than five years of employment with the city to receive a 2.5 percent raise and staff with more than 10 years to receive a 5 percent raise. The raises should help Leander retain veteran employees, Powers said.
Whether Cedar Park can maintain a stable tax rate will depend on residential and commercial growth, along with fluctuations in tax and property values, Selleck said.
Increasing sales tax and adding jobs will remain priorities for Cedar Park as increases in those areas can mitigate recent decreases in property values, Councilman Matt Powell said.
â€œWeâ€™ve put ourselves on solid financial footing this year. I think we have given ourselves the opportunity in the future to move forward with our initiatives,â€ Powell said.
Leander has one of the highest property tax rates in the area in part because the city is heavily residential and needs more commercial development to increase sales tax revenue, Powers said.
He also said he thinks Leander will keep a steady tax rate during the next two years.
Cowman said the most important thing for Leanderâ€™s long-term success as a city is growth.
â€œWe need growth. Growth is what weâ€™ve planned on,â€ he said. â€œLeander is holding our own and doing well. We just need growth. That is the answer.â€
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