Council approves proposed 2024 property tax rate
San Marcos City Council voted, six to zero with one council member absent, to set the proposed property tax rate at 60.3 cents per $100 of taxable value for Fiscal Year 2024. The rate is the same as 2023.
The action on the tax rate proposal came during the city council's regular meeting held Tuesday.
The council will hold public hearings on the proposed tax rate on Sept. 5 and Sept. 19.
The final tax rate will be set Sept. 19 after the second public hearing.
San Marcos Director of Finance Jon Locke said the tax rate can be equal to or lower than the rate proposed at Tuesday’s meeting, depending on what is heard during the public hearing and how council determines to proceed at that point.
Locke gave a presentation to the council on the proposed tax rate, as well as other tax rates, and the financial implications for the city.
Locke said the rate that will produce the same amount of tax revenue as the previous year, the no-new-revenue rate, is 53.05 cents per $100, and the tax rate levied for the current fiscal year is 60.3 cents per $100. He said the proposed tax rate for 2024 (60.3 cents per $100) was used in the preparation of the Fiscal Year 2024 proposed budget, and the maximum rate allowed by law without voter approval is 68.87 cents.
“The voter approval rate is calculated by increasing the operational portion of the no-new-revenue rate by 3.5 percent,” Locke said. “You also add on to that any unused increment over the past three years.”
He said the no-new-revenue rate would result in $48,840,732 of property tax revenue, which would be $5,991,429 less than the budgeted rate, and the proposed budget rate would result in $49,832,161 of property tax revenue. He said the voter approval rate, 68.87 cents, would result in $59,914,444 of property tax revenue, which is $7,082,263 more than the budgeted rate.
“For Fiscal Year ‘24, every penny on the tax rate represents about $800,000,” Locke said.
He said the operations tax rate is 44.47 cents and funds core services, strategic goals, investing in employees and special programs, and the debt tax rate is 15.83 cents and funds capital projects.
Locke said the average single family home appraised value was $205,721 in 2020, $211,405 in 2021, $238,543 in 2022, $310,153 in 2023 and would be $369,674 in 2024.
“You can see from 2023 to Fiscal Year 2024, that the average home appraised value increased about 19%,” Locke said.
He said although the average value increased to $369,674, homestead properties are capped at a 10% increase, which means the average homestead value would be $338,218.
“The average value increased by just over $43,000 [for FY 2024 compared to 2023],” Locke said. “That average value is reduced by the homestead exemption that city council approved, so that brings the taxable value down by $15,000, to in Fiscal Year ‘24, $323,000.”
Locke said that for each home, that would be an increase of $22 a month or $263 for the year. He added that the homestead exemption, as well as the senior and disabled exemption, would save citizens $182 million, which equates to $1.1 million in tax revenue that the city would have otherwise received.
In his presentation, Locke showed a slide with the historical tax rate and taxable value for the city.
“The total taxable value of the city, which you see from ‘23 to ‘24, increased from $8.1 billion to $9.6 billion,” Locke said. “The next column over is the taxable value of the tax increment reinvestment zones. That gets removed from the total taxable value, and what is remaining is what the city is able to operate on. And that’s what we use to fund the quality of life and the core services that we discussed earlier, as well as the debt service. And that taxable value increased from $7.1 billion to $8.4 billion. In total it was 18%.”
Locke said the city would receive approximately $9.7 billion.
“8.4 [billion dollars] of that is for the taxable value that we’re able to use for our core services, and 1.2 [billion dollars] of that is for the tax increment reinvestment zone,” Locke said.
Locke then went on to discuss another aspect of the tax rate issue. He showed a slide that illustrated the splitting of taxable revenue into three parts: the tax increment reinvestment zone, operations and debt.
According to the Texas Legislature online website, a municipality may designate an adjacent or nonadjacent defined area of land within the municipality or extraterritorial jurisdiction as a tax increment reinvestment zone, and taxing entities may participate in the TIRZ by dedicating that portion of taxes collected on new development and redevelopment.
“The tax revenue that the city will receive is 36.8 million [dollars] for operations, 13.1 million [dollars] is for debt service and the 7.3 million [dollars] is for the tax increment reinvestment zones,” Locke said.
Locke showed a slide comparing existing property appraisal growth with new property taxable value added.
“It's just the reappraisal growth of a taxable property that was already there compared to new property being added to the tax roll, and what it shows each year is the total growth in millions of dollars. So, in Fiscal Year 2024 the total growth is $1.5 billion. Of that amount, 64% of that is from the existing property appraisal growth,” Locke said. “36% was new value that was added, and so another way to look at that is, of the services that the city is providing, that is how it’s being funded, the difference between the new growth paying for it, and the existing properties paying for it.” He added that for the three, five and 10-year averages, the split is about 60% for existing property appraisal growth and 40% for new property.
San Marcos Mayor Jane Hughson commended city staff for sticking with the same tax rate as last year, per recommendation of the council and “making it work.”
San Marcos City Manager Stephanie Reyes said that the city has been conducting a campaign on social media to alert residents of the homestead exemption, which was approved in 2022, and there are videos available on the city’s website to explain strategic initiatives and the budget.
