In another win for Wylie taxpayers, city officials recommended for the second year in a row lowering the property tax rate to keep tax bills from going up despite rising property values.
Wylie City Council voted unanimously on August 13 to propose the “effective” property tax rate—also called the “no-new-revenue” rate because it collects the same amount of revenue overall from the same properties taxed the previous year, both residential and commercial.
“I proudly voted for and support the effective tax rate for Wylie,” new council member David Duke told Texas Scorecard. Duke, who was elected in May, campaigned on a commitment to vote against property tax increases and support fiscally responsible spending based on the effective tax rate.
The effective rate adjusts as property values change to keep taxpayers’ bills roughly the same, in the aggregate, though individual results vary based on valuations and exemptions.
Last year, council’s vote was split 4-3 in favor of higher taxes. But state law requires a 60 percent majority vote to approve a tax increase. Because council members Matthew Porter, Jeff Forrester, and Timothy Wallis opposed that tax hike, the effective rate was automatically adopted instead—a win for local taxpayers overburdened by property taxes.
This year, city staff prepared a budget for Fiscal Year 2019-2020 based on the effective rate of $0.688454 per $100 of assessed taxable value. The city expects to collect $34.4 million in property tax revenue—4.5 percent more than last year. Wylie’s total taxable value including new properties grew 9.8 percent.
Like all local taxing entities, Wylie will collect tax revenue from new property added to the tax rolls this year that is not included in the effective rate calculation. That means growing cities like Wylie take in more property tax revenue even at the “no-new-revenue” rate. The added revenue from growth in the tax base pays for the added costs of serving the city’s growing population.
About 75 percent of Wylie’s property tax revenue ($25.8 million) will be spent on the city’s general operating expenses, budgeted at $44 million—a 3.5 percent increase over last year’s budget.
Property taxes account for 58 percent of the city’s general fund revenue, with another 13 percent coming from sales taxes. Half the general fund ($21.9 million) will be spent on public safety, mainly police and fire. The rest goes to pay for general government ($12.3 million), parks and library ($4.7 million), streets ($3.9 million), and development ($1.1 million).
The remaining 25 percent of the budgeted property tax revenue ($8.6 million) is allocated to repaying bond debt. Wylie currently owes $87 million in property tax-supported bond debt and interest.
Collin County and the City of Plano are also budgeting based on the effective tax rate this year, while the cities of Allen, Frisco, and McKinney are raising property taxes.
Texas’ Truth in Taxation laws require taxing entities to calculate and publish their effective rate each year to ensure the public is informed of any property tax increases. Year-over-year rate comparisons are meaningless because they don’t account for changing property values.
Because Wylie chose the effective tax rate, the city is not required to hold public hearings on the tax rate. City council opted to set an August 27 hearing on the budget and tax rate together and will take a final vote on both September 10.
