Travis County Commissioners Court
February 14, 2006
Item 6
Number 6 is to receive briefing and take appropriate action on the following budget items. A is fy 2007 budget parameters, including projected revenue and expense issues and assumptions. And b, fy '07 budget guidelines. We did get an update from christian and leroy last week. Did not have many questions. We postponed both of these one week to give us a chance to think over the specific recommendations. I believe I was the one who suggested to christian that it may be a good idea for the court to approve these assumptions, so any department that questioned them would at least know when the court had given them at least a preliminary blessing, leaving open basically room for any discussions later on. Any questions or comments after reading them? Any highlights that you must cover today, mr. Smith?
>> there are no highlights I must cover. Just to refresh your memory, last Tuesday I summarized those parameters reflecting increases in property values and decreases in planned tax rate. Tax rate at least at this point would go down at least four cents. That would be feasible in no small part due to the fact that there are literally dozens of assumptions, which we shared with you in writing, but did not present that would reflect either a small surplus or a small shortfall, but that at this point it looks like we'll be able to balance the '07 budget within the parameters we have and meet a wide variety of needs. And I’m happy to go through the major assumptions we have, if you'd like, but I’m respectful of your time.
>> what if there's questions, comments or a request for you to go through?
>> I think we heard on the news about the values increasing, and I think they've caught on to the fact that the county always adjusts the tax rate. And so can you reconfirm that for me?
>> yes. We have a letter from the chief appraiser, which indicates that based on his information today, total values are projected to increase a little over 13% beyond the amount that was certified for the current budget. And that new value on the ground, meaning new properties, will be 2.4 billion, which is higher than the 1.9 billion that was certified in '06. The key for homestead owners is the fact that commercial properties are going to clearly increase at a higher rate than homesteads. That is a reversal of what has happened in the past where homesteads increased higher than commercial and as a matter of fact, commercial was decreasing. So that at this point it looks as if nonresidential commercial values will be increasing 20% and residential values increasing about six percent. So that's the situation from the appraisal district. They will certify in July, so there's a lot of work that they still have to do just as there's a lot of work that y'all must do to balance the budget based on those values. Now, the Commissioners court's budget guidelines indicate that we start our budget discussions at or near the effective tax rate. The effective tax rate simply means the appropriate tax rate that is related to the either increase or decrease in values. So when values go down, the effective tax rate goes up. When the values go up, the effective tax rate goes down. In this case we have a substantial increase in values that we are facing and we will see a substantial decrease in the effective tax rate. And so we will know much more in July. The preliminary budget will propose a specific tax rate. There's no question that it can be at or near the effective. There was a discussion as to whether near means above or below, and the answer is yes to that question. Near is near. And we will know more when we are able to see some of these ranges. And for example, you may see in here jail population, one time costs. We have a low amount of $200,000 and we have a high amount of a million and a half. That's a very large variance. And it is driven by population. To the degree that we can control our jail population, we will be able to stay at the low end. To the agree the jail population goes beyond what we have seen in the past, it may even be higher than one and a half million. So those are some of the -- that's just one example. We have a new criminal court coming online. There's no question. It's a new criminal district court. We have somewhere between 1 and 1.7 million. That's a 700,000-dollar difference. That a lot of money. It's early to know whether we will still be able to meet all of the needs and do rational good public service with a-million-dollar court as opposed to a 1.7-million-dollar court. What will happen between now and July is we will cyst through programs and -- sift through programs and issues such and that and come to a conclusion, share that with you in the preliminary budget and some people may wish to suggest that our judgments are incorrect and when they do, that will be part of the budget hearings. So all of that is part and parcel of what we do for a living. I would be glad to go through a wide variety of other examples, but those are circumstances which will lead us to a conclusion as to where near is. Will it be below, at or slightly above? I don't think there's any question that we will at least in my mind, that we can stay within two percent above the effective tax rate and we certainly are going to endeavor to bring it in at. It all depends on a wide variety of judgment calls, compensation issues and health benefits. We are putting down somewhere between a three and four percent compensation increase. We are recognizing that health benefits are going to be at least 2.6 million. We think the high amount is 2.9. It may be higher than that. There is a retiree health benefits facing us in '08. It's something we call gasbe 34. -- 45, I’m sorry. And that's a governmental accounting standards board for public entities which in essence is saying you've got to recognize future liabilities and future costs that retirees will be facing and you may choose, if you can, to prepare for that because it's coming and it's going to be a major, major issue for all public entities. So those are some of the reasons why I believe that we can go at or near and keep near -- very near the effective tax rate. Did that answer your question, Commissioner?
>> yes, it did. Thank you very much. I think the public is understanding that the increase in the value is not an automatic tax increase, so they've been talking about it. So I just wanted them to hear it one more time.
>> [inaudible - no mic]. There may be issues that are more -- mandates or restrictions related to appraisal caps and revenue caps and certainly the regular session of the ledge is right around the corner as well. So I think this is going to be a preview of what's going to come. May be impacted even on the education debate.
>> anybody else here on this item? Move approval of 6 a and 6 b.
>> second.
>> discussion of the motion? All in favor? That passes by unanimous vote. Congratulations, mr. Smith.
>> thank you very much.
>> thank you.
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Last Modified:
Wednesday, February 15, 2006 11:17 AM