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City of Pearland considers tax rate increase

August 24, 2018

The city of Pearland is considering a property tax rate increase of more than 2 cents per $100 valuation, with a city financial official and council member saying the boost is needed after a slowdown in overall revenue growth.

The proposed rate increase of 2.4 cents per $100 valuation would bring the tax rate to 70.9 cents to support a proposed budget based on revenues of $329.8 million. That spending plan would add staff for a planned unit for police investigations and would fund projects for park improvements, Lower Kirby infrastructure work and the renovation of the community’s historic train depot. The proposed budget also would provide for a 2 percent cost-of-living increase for all city employees.

City Council will take a preliminary vote on the budget plan, which includes the proposed tax rate increase, on Sept. 17 and make a final decision on Sept. 24.

For the owner of a home with a taxable value of $200,000 after exemptions, the proposed increase would add an additional $48 to the tax bill for a total of $1,418. The city offers a homestead exemption of 2.5 percent of appraised value. An exemption for residents over age 65 can take up to $40,000 off a home’s taxable value.

A public hearing on the budget is scheduled for 6:30 p.m. Sept. 10 at Pearland City Hall, 3519 Liberty Drive.

City Councilman Trent Perez said the proposed rate increase is necessary for the city to continue provide the same level of services to the residents of Pearland as in the past.

“We need to make sure (the city is) making the same amount of money,” Perez said.

The proposed 70.9 cent rate reflects what is needed to garner the same property tax revenue as last year, a calculation known as the effective tax rate, said Rhonda Daugherty, the city’s assistant finance director.

Said Perez: “It’s either we adopt the effective tax rate or we start having a a conversation about having less police officers on the street.”

Property tax revenue for the city in 2018 is estimated at $57.6 million, Daugherty said.

Although the city continues to see residential growth of about 3.6 percent, that rate of growth has significantly decreased from five to 10 years ago, she said.

Daugherty noted that a tax increment reinvestment zone covering approximately 3,467 acres in Shadow Creek Ranch captures revenue from increasing property values in that district to use for local economic development and infrastructure needs.

In 2018, an estimated $18.4 million generated from property owners in that district, know as TIRZ No. 2, went back into projects for that area.

“That additional growth is taken out of the effective tax-rate calculation,” Daugherty said.

Growth in taxable value has been frozen for properties within the TIRZ ever since it was created in 1998.

The proposed city budget, which contains a total of $329.8 million in revenues, recommends no increase to sewer and water rates but, budget documents show that the rate is projected to increase by 5 percent in 2020 and by 12.7 percent in 2021.

One request for the proposed budget is to add two plain-clothes police officer positions to focus on investigations, with a $61,868 salary for each position including overtime and automobile allowance. The cost for each officer comes to $138,861 annually when benefits are included.

The additional officers, read requesting documents, would serve in a unit that would have the ability to operate undercover and would work with patrol and narcotics personnel on theft and narcotics cases.

The budget proposal also would fund hiring of a licensed traffic engineer for $125,000 annually including cost of benefits.

Officials said the city’s general fund, projected at $80.3 million of expenditures, provides the bulk of public service operations including fire, police, parks, public works, streets and drainage maintenance.

The majority of the general fund — 56 percent — is for public safety functions, according to a press release.

jaimy.jones@chron.com

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