As the city of Nolanville began to plan its budget for fiscal year 2018-2019, city staff and council members realized that the state-approved property tax exemption to veterans who are 100 percent disabled and their spouses would mean a huge loss in local operating revenue for the upcoming year.
To temper this financial crisis, council members recently approved a tax rate increase of 2.65 cents, from 49.99 cents to 52.65 cents per $100 valuation.
The general fund tax rate will be 40.65 cents with debt service at 12 cents.
City Manager Kara Escajeda said, “We are honored to be a city where a large proportion of disabled veterans choose to retire, and we are in no way suggesting that these exemptions be curtailed.”
Escajeda told the Herald that, “We are, however, asking that Nolanville receive the same type of relief from the state as those that touch the boundaries of military bases like Fort Hood.
Harker Heights is in a similar situation where the city limits do not connect with the Army base and because of the way that this exemption was designed, it are losing more than $1 millions in exempted property tax revenue.
Nolanville is 1.5 miles from the edge of Fort. Hood. Killeen’s ETJ extends to the north of Nolanville just enough that the city can’t border the Army post.
The state exemption provided to these veterans and surviving spouses deducted by the 2018 assessed value of $278,254,403 equals $32,564,292, or approximately 12 percent of the city’s total value.
The effect of the exemption on last year’s tax rate of 49.99 cents equaled $162,788 lost due to this exemption.
Escajeda reported that more than 30 percent of new properties added to the roll in the past year received the 100 percent exemption.
New taxable property totaled $9,391,446. The new taxable property exemptions totaled $2,826,325.
Escajeda said, “The city was able to buffer the impact of the exemption through the annexation of some commercial properties that increased the sales tax base in 2016.”
But now it is 2018, with city officials and council members agreeing that this situation has serious consequences. If exemptions continue at the current rate without any assistance from the state Legislature, the loss of funds will stifle the expansion of services such as fire, medical, police and infrastructure improvements in the city of Nolanville, Escajeda said.
Without the tax increase, some other financial considerations suffering would be pay raises, street maintenance, adding to the police fleet, and an additional officer..
Strategies to prevent an even higher tax rate were postponing the life cycle replacement of a police vehicle, delaying the hiring of an investigator, extending the time to implement large park grant improvements and reducing the amount of professional services.