The Cedar Park City Council voted 5-to-2 Thursday to adopt the lowest property tax rate in 22 years for Fiscal Year 2020, marking the seventh consecutive year the tax rate has been lowered.
Council members Tim Kelly and Dorian Chavez were the only opposing votes. All council members agreed on reducing the property tax rate but the two were pushing hard during the meeting for an even lower property tax rate. They argued for a tax rate of $0.4465 per $100 property valuation, which would reduce how much much extra the city paid down its bond debts in 2020 on top of its regular debt service payments.
The council ultimately settled on the compromise total of $0.447 per $100 property valuation, which was still lower than the reduced rate already being considered by the council. The final adopted rate is two-tenths of a cent lower than this year's rate.
Despite the cuts to the rate, the Fiscal Year 2020 city General will still grow 3.2 percent to a total of $58.1 million due in a large part to the city's explosive growth in new developments and increasing property values, which create more valuation to be taxed.
Notably, the budget will add a total of five new city staff positions including two new police officer positions and a new library position under the General Fund and two full-time employments under the Utility Fund budget. The budget earmarks $807,500 for the Police and Fire departments for additional compensation including an increase to their overall pay plans as well as tenure-based annual step increases based per their meet-and-confer agreements
The budget will also buy down $2.95 million in city debt, saving approximately $1 million in interest payments over the life of the debt.
The budget will also included several major bond-funded Capital Improvement projects, including $18 million for the planned new library and $8.6 million in various transportation projects. Several community projects, including Bell Boulevard and the Lakeline Park Phase 1, will be funded by the city's sales tax revenues. Other items funded by reallocation of a portion of the sales tax included work on the city's stormwater drainage program.
Despite the council reducing the tax rate, some local residents may see a larger tax bill due to the complexities of the tax bill, such as the Leander ISD school district, the county and other government entities taking up a substantial percentage of the total bill, and the explosive population growth in Cedar Park and throughout Williamson County.
Notably, the growth has resulted in a massive surge in property values as the region becomes more desirable. Cities and homeowners alike typically like growth in population size and property values because it allows cities to raise the same amount of funds with a lower rate due to the cost being spread among more people. However, if the increase occurs over a short, rapid growth period, some homeowner can struggle with their bill growing even when the city cuts rates – because their home is suddenly more valuable and can be taxed for more money.
For example, the average Cedar Park home last year was valued at $319,600, resulting in a city tax bill of $1,435. If the home’s value remained the same this year, the average tax bill would be about $6.40 less under the new rate.
However, the average Cedar Park home this year is valued at $333,200, resulting in a city tax bill of $1,489, representing an increase of about $4.50 per month. If a home’s value increased from $319,600 to $333,200 this year, the average tax bill would be approximately $54 more even under the new, reduced tax rate.