The Kilgore City Council’s Tuesday night meeting ended with an ‘agree to disagree’ moment as officials continue their discussion of the city’s looming tax rate for Fiscal Year 2018-2019.
City Manager Josh Selleck’s proposed budget includes about $3.1 million drawn from various reserves to cover a litany of projects – some of which have been put off for years amid the economic downturn – on top of ongoing operational costs. That injection of funds includes more than $1 million from sales tax dollars, more accruing as the local market recovers.
To cover the proposed budget’s expenditures, Selleck has recommended a tax rate of 53.9-cents per $100 valuation, the same rate as the current FY2018. On a $100,000 home, a taxpayer would pay $539 to City Hall.
While keeping the rate unchanged, the city will reap more in revenue following the past year’s improvements in the tax base. The effective tax rate (what’s needed to recoup the same revenue as the prior year) is about 51.5 cents per $100 valuation.
Amid the ongoing recovery, Kilgore Mayor Pro Tem Harvey McClendon suggested the city should lower the tax rate, easing up the burden on payers while relying more on the steadily-improving sales tax revenues. This month’s check from the state comptroller’s office is about $1.19 million, the largest allocation Kilgore has received since early 2009.
“Kilgore is blessed with sales tax revenues,” McClendon said. With more monies coming in, “Personally, I would like to reduce the tax rate this year.
“I think we could conservatively increase our sales tax revenues to allow for a tax decrease.”
In his approach to the city’s finances, Selleck is loathe to base operating costs on sales tax dollars, wary of the local revenue rollercoaster tied to oil-and-gas performance.
“Based on what we know the sales tax is,” he countered, “there’s no way I would recommend we increase the sustainable portion.”
Kilgore Mayor Ronnie Spradlin was also reluctant to lower the tax rate – in a common refrain, he warns against backing offing the rate, as previous elected officials did here, when it’s so far below where it should be relative to other communities and the city’s ongoing needs.
“We’re spending a lot out of surplus right now,” he said. As far as the increase sales tax revenues, “The money that we are going to generate as a surplus this year still is going to leave us using our reserves. I can’t support going down on taxes while we’re still spending money out of the reserves.”
Just the variety of street projects on tap for the coming year, Selleck added, need $2.5 million.
McClendon said he agrees with the expenditures presented in the proposed budget, but he maintains a different philosophy on how to fund them.
Weighing an increase in assessed property values inside the city limits, “That $65 million that’s on the ground is going to generate a lot of sales tax this next year.”
Council member Merlyn Holmes disagrees.
“I really don’t think you’re correct on that,” she said. Likewise on sales tax, “It’s still so volatile, you can’t count on that.
As far as the tax rate, “I could never say, let’s go down right now. It’s too volatile.”
Ultimately, Selleck and McClendon agreed to meet one-on-one for another review of the city’s finances prior to the council’s next meeting. The group’s next regularly-scheduled session is set for Aug. 28 and will include a public hearing on the proposed tax rate. The second, mandated hearing on the rate is scheduled for Sept. 11 as the elected officials prepare to adopt the rate for FY19.
With a proposed tax rate under consideration, by law the council can adopt a rate less than the 0.539 proposed but no more.
The council typically meets on the second and fourth Tuesdays of the month at 5:30 p.m. in Kilgore City Hall at 815 N. Kilgore St.