By Kevin M. Smith
Killeen Daily Herald
Killeen property owners would save $8 to $32 next year if a proposed tax rate decrease is approved in two weeks. Some say the loss in city revenues is not worth it, while others say the tax rate cut is not enough.
Last week, the Killeen City Council, during a special workshop, gave a consensus to consider cutting the tax rate from the current 69.5 cents per $100 assessed property valuation to 68.5 cents.
Councilman Billy Workman said the city can cut the budget to reduce the tax rate even more. He suggested eliminating the 4 percent cost of living adjustment to all city employees – excluding the police and fire department personnel – and dropping the tax rate to about 65 cents.
"We're getting top heavy with pay," Workman said.
Others were quick to defend the city employees' pay raise.
"I don't think the employees we have in the city get paid enough," Councilman Juan Rivera said. "I cannot do my job without the staff."
Jules Petit, a Killeen resident, spoke against a tax rate decrease at the council's workshop and meeting Tuesday.
"You mess with my police, fire and city employee pay, I will have a mission," Petit said.
He said Killeen has, in the past, not paid city employees adequately.
"We used to play this game where we said, 'Trust us, we'll pay you later,'" Petit said, adding it took years before city employees saw another pay raise.
City employees received a 4 percent pay raise last year.
Workman scoffed that the city could give its employees a pay raise but not allow a tax break for residents.
City Manager Connie Green said a 1-cent or 2-cent tax-rate decrease would not hurt the city's 2007-08 budget, but could cause problems in the future.
The city's proposed budget for the fiscal year that begins Oct. 1 would issue $42 million in bonds. Green said in addition to the city needing to continue making bond payments, he plans to propose that the city issue another $13 million in bonds for street improvements for the 2008-09 budget. He said the first year for only the $13 million in bonds would require about a $687,000 payment from the 2008-09 budget.
"That's approximately 2 cents," Green said.
Green said the city would need to increase the tax rate 2 to 3 cents in the 2008-09 budget to make up for the lost funds from cutting the tax rate in the 2007-08 budget and paying for the $13 million in bonds for street projects.
One cent of property tax generates $326,329, Green said, and counts that as the amount that would be lost by reducing the tax rate. Green said a person who owns a $100,000 home would save $10.29 next year with a 1-cent tax rate reduction. The average appraised valuation of a home in Killeen is $96,000.
While 65.8 cents is the effective rate – needed to raise the same amount as last year's rate – Green said a 3-cent reduction to 66.5 cents would have a negative fiscal impact by sending the wrong message to the credit market.
Green said the tax rate is necessary to fund the $42 million in capital improvements that the residents approved in 2002.
"If you don't want to do this $42 million ... we can cut the tax rate 5 cents," Green said.
Green said voters were told that the tax rate would immediately increase by 5 cents if they approved the $64 million in bonds for improvements, including a new police station, animal shelter improvements, a new recreation center, a new senior citizens center and street repairs.
"I view the budget as delivery on the capital improvement program the voters approved," Green said.
Green said his office receives constant comments about why the bonds haven't been used yet. His response is that because the war in Iraq started about the same time, and the city was waiting to see if the economy would remain stable to support repaying the bonds. It has, Green said, and now time is of the essence.
"The longer we wait, the more the cost goes up," Green said.
Green said giving the residents the capital improvements they approved is equal to a tax rate decrease.
"It's a huge return to the taxpayers," Green said.
Workman continued to lobby for a tax break for Killeen residents.
"I still stand by what I said," Workman said.
Councilman Larry Cole asked what programs would be cut to make up for the lost money in property tax revenue.
"We're taking one step forward and two steps back," Cole said.
Petit also spoke against the tax rate decrease because the tax rate will inevitably have to go up the next year.
"When you bring that one cent back, it's going to hurt me financially," Petit said.
The first of two public hearings regarding the tax rate was held at Tuesday's council meeting. There were no comments from the public except from Petit, who shared his tax-rate comments.
The next public hearing for the tax rate will be Sept. 4. The council is scheduled to vote on the tax rate and budget on Sept. 11. If the budget is not approved by the council by Sept. 20, it will go into effect as originally presented.
Contact Kevin M. Smith at email@example.com or call (254) 501-7550