2020 change set to hike 2019 taxes

Photo: State champion golfer Jack Burke of Little Cypress-Mauriceville, right, is recognized by Orange Mayor Larry Spears as city council declared it Jack Burke Day in Orange at Tuesday’s city council meeting.

Dave Rogers

For The Record

The Texas Legislature’s vote earlier this year to help Texas property owners avoid skyrocketing taxes in the future could cause them some pain come New Year’s Eve.

With more than a year until property tax reforming Senate Bill 2 goes into effect, the acting city manager of the City of Orange declared the city should raise tax rates as high as possible without bringing on a mandatory “rollback” election by the taxpayers.

Currently, a city or county can raise its tax rate up to 7.99 percent from year to year without citizen say-so. The new Texas law passed in May, when it takes effect in 2020, will lower the rollback rate to 3.5 percent or higher.

“This [SB 2] is something that will have decades of impact,” Knauf said, referring to fears across the state that the new law will hamper local governments’ ability to provide vital services.

“I say our goal should be to go up 7.99 percent this year, and not leave anything,” Knauf said.

Now, some good news.

Because property values across Orange County are expected to go up about 5 percent once appeals of taxpayers’ assessments conclude and final values are posted in July, that will lower the effective tax rate.

The effective tax rate, the rate the city must charge to gain the same tax revenue as last year, should go down, which means the city would have a lower starting point for its 7.99 allowable increase.

The Orange city tax rate has increased by 13.5 percent, from 70.9 cents per $100 value in 2016 to 80.5 cents per $100 value in 2018, the past two years.

Last year’s tax rate increase of nearly nine cents – from 71.7 per $100 to 80.5 per $100 – was a reaction to lowered property values left by Tropical Storm Harvey.

Knauf said a new state law will reduce the city’s revenue from telecommunications franchise fees estimated at $100,000 and the city expects a drop in sales tax receipts because most of the storm repair construction spending is complete.

Good news delivered by Finance Director Cheryl Zeto is a likely reduction in employee insurance costs.

Because he expects tough times in future years, Knauf said he though employees should get a cost of living increases in the next budget and a no-layoff pledge.

Big-ticket needs include more computer storage, maintenance for city hall and recreation facilities, the addition of one or two people to help with code enforcement and creating jobs for an assistant public works director and a grants accountant.

“I’ve been in city government 40 years next February,” Knauf said, “and I’ve never seen a citizen come to city council and say we have too many police officers, too many services.

“If we go up 7.99 percent this year, we might be able to do something this year, but next year it’s going to be a challenge.”