City officials may raise the property tax rate by 4.89 percent as the affluent community faces a fall-off in its tax rolls for the first time in 16 years.
The rate increase, which was proposed by City Manager Bob Livingston this week, is designed to help counter a 4.66 percent decline in the tax base.
City officials point out that a recent decline in home values means that even if the tax rate increase is approved, the average homeowner would pay $31 less next year. If the tax rate is left the same, the average tax bill is expected to fall by $147.
The average market value for single-family homes – which make up the majority of the tax base – fell 5.81 percent. That puts the value of the average home at about $1.12 million, compared with about $1.19 million the previous year.
A tax rate increase – the first in 16 years – wouldn't generate enough money by itself to fund the city's $43.2 million budget, officials said. To generate money from other sources, Livingston proposes shifting $451,077 into the general fund from either the city's equipment services or self-insurance funds.
"It's not the kind of thing you want to do every year, but in order to get through a slump or a time like this, it's prudent," city finance director Kent Austin said.
Like many cities, University Park is grappling with declining revenue on multiple fronts. Sales tax proceeds, which have declined for two years, appear to have bottomed out, Austin said. But revenue from building permit fees, which was more than $2.25 million in 2007, only netted $800,000 in 2010.
Next year, the city expects more money from building permits because of several big projects, including the George W. Bush Presidential Library at SMU. City officials say they hope the economy improves enough to spur more single-family home construction the following year.
Another possible source of revenue for the fiscal year that begins Oct. 1 is a transfer of $500,000 from the reserve fund the city established when it sold some land to SMU for more than $15 million. However, a special oversight committee would have to sign off on that because the city planned to hold the money in reserve.
Livingston also proposed raising fees for burglar alarm permits and for use of the newly renovated municipal swimming pool.
On the spending side, Livingston proposes giving some city employees a 3 percent pay raise. They did not get a raise this year. He said it's justified because competitive pay is largely responsible for the city's low employee turnover rate.
By Lori Stahl / Dallas Morning News
