To the Editor:
The Harker Heights mayor is to be commended for allowing a dialogue on the city budget and property tax increase because it brought out our biggest challenge.
The increasing 100% DV exemption, with too-low future sales tax growth, resulted in property taxes being raised 4.9% this year, with annual tax increases likely through 2026.
Not reported by this paper, the city manager said the reason for raising property taxes now is because once the city spending of the federal grant money is complete, the city will run deficit spending from FY23 through FY26 and the property taxes put into reserves well above the city policy requirements this year are necessary because the city will draw them down over the next four budgets.
Despite misleading straw-man arguments that using 2x-over-policy excess reserves for tax relief would result in city service cuts this year, the reality is that the taxes and reserves are increased today because the council knows it must tax as much as it can now to offset future declines.
The city manager stated to the council, and the budget shows it (“Budgeting Assumption – Forecasts: Forecasted at 0.50% (low rate is due to veteran’s exemption)”, that because of the increasing 100% exemptions, the city will only see minimal overall property tax revenue growth.
This year’s increase in fully exempted homes to 27% of the tax base contributed to the very lowest new growth percentage of Bell County cities at just 1.4%.
Now our city has codified that it doesn’t see the problem getting better and needs to tax every dollar it can right now, even with over $9M of federal grant money.
The city has a structural tax gap. The only way out of it, absent reform in the 100% DV policy, is to replace tax dollars with sales tax revenue. But this city budget shows growth at just 2% per year through 2026.
One citizen recommended a new approach to increase sales tax revenue by establishing an economic development corporation like other Bell County cities but he was rebuked.
Something must change because the city budget shows a downward slope in its fiscal strength. Taxpayers are demanding a better, smarter policy than maximum annual tax increases from the homeowners who pay taxes.