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Taxpayers in the city of Frisco will again see higher property tax bills, on average, even though the city is not raising the tax rate.

At the city’s proposed rate, the average Frisco homeowner will pay $1,845 in city property taxes on a home valued at $413,028, up about 2 percent from last year.

That represents a 44 percent increase since 2013, when the average homeowner’s city property tax bill was $1,278 and the average home valued at $276,592. City council has lowered the tax rate over the years, but not enough to offset rising property values.

A preliminary Fiscal Year 2019-20 budget presented by city staff to council members recommends a city property tax rate of $0.4466 per $100 of assessed taxable value—the same rate charged in 2018-19. That rate is about a penny higher than the “effective” tax rate—also called the “no-new-revenue” rate because it collects the same amount of property tax revenue overall from the same properties taxed the previous year, both residential and commercial.

Texas’ Truth in Taxation laws require taxing entities to calculate and publish their effective rate to ensure the public is informed of any tax increases. Year-over-year rate comparisons are meaningless because they don’t account for changing property values. The effective rate adjusts as property values change to keep taxpayers’ bills roughly the same, in the aggregate, though individual taxpayers’ results vary based on valuations and exemptions.

The city maintained its homestead and over-65 exemptions for FY 2020, but Frisco Mayor Jeff Cheney said in February property tax reform could threaten those exemptions. Reforms passed by the state legislature this year, which limit Frisco and most other cities to 3.5 percent increases in operating property tax revenue without a public vote, take effect next year.

Because Frisco chose a property tax rate higher than the effective rate, state law requires the city to hold two public hearings before adopting a final rate. The hearings are set for August 27 and September 3. Budget hearings are set for August 20 and September 3. Frisco City Council will adopt a final budget and tax rate on September 17.

Revenue 

At its recommended rate, the city anticipates collecting $134 million in property tax revenue, 5.8 percent more than last year. Frisco’s growing tax base is driving most of the rise in tax collections. The city’s total property valuation for 2019 grew 7.8 percent over last year—about 2.1 percent from higher overall appraised values of existing properties and 5.7 percent from new property added to the city’s tax rolls this year.

Tax revenue collected from new property is not included in calculating the effective rate, meaning growing cities like Frisco take in more property tax revenue even at the “no-new-revenue” rate. The added tax revenue from growth in the tax base funds the added costs of serving the city’s growing population. Frisco’s population is expected to grow by over 5 percent in FY 2020 to over 200,000 residents.

Property taxes account for half the city’s general fund revenue, with another 25 percent coming from sales taxes.

Spending

About 65 percent of the property tax revenue ($88 million) will be spent on general operating expenses. Frisco’s proposed general fund budget for FY 2020 is $178 million, a 2.9 percent increase over last year’s proposed $173 million budget.

The biggest chunk of the general fund, 49 percent, is spent on public safety (police and fire). Other general fund expenses include government administration, parks and recreation, public works, development, and libraries.

The remaining 35 percent ($46 million) of the budgeted property tax revenue is allocated to repaying bond debt. Frisco currently owes $536 million in debt secured by property taxes. In May, Frisco voters approved $345 million in new bond debt that also must be repaid, with interest, using property tax revenue.

Frisco City Council Budget and Tax Rate Hearings
August 20: 1st Budget Public Hearing
August 27: 1st Tax Rate Public Hearing
September 3: 2nd Budget and Tax Rate Public Hearings
September 17: City council adopts final Budget and Tax Rate