For years, Pflugerville has had one of the highest property tax rates in the Austin area, but with five consecutive years of decreasing rates, Mayor Jeff Coleman said those days might soon come to an end.
"I firmly believe that in the next four to seven years, this city is going to have to make a dramatic decrease in the tax rate," he said. "By then, Stone Hill [Town Center] will be full, Verde [commercial development] will be full. It's just going to take some time."
City officials anticipate that commercial growth in Pflugerville will continue to push the property tax rate down, as it has done in other cities experiencing similar growth. But Coleman said it will take time for retailers to generate the substantial sales tax revenue needed to change the city's funding mix.
Growing pains, property values
On Sept. 23, the city council approved the 2009 fiscal year budget, including a half-cent decrease in the property tax rate. Homeowners will pay more next year in property taxes despite decreased rate.
The current city tax rate of $0.614 per $100 of property valuation will be lower than last year's rate of $0.619, but rising property values mean homeowners are likely to pay more at tax time. The value of an average home in Pflugerville is $169,791, and with the new rate a homeowner will pay $1,042.52 next year in city property tax - an increase of $25.20.
"In the 2000 [U.S.] Census, we had 16,000 people. Today, we have over 41,800," Coleman said. "In less than eight years we have grown drastically."
Rooftop market
Although the new rate is lower than last year's, it will still remain significantly higher than nearby cities such as Round Rock and Austin, with respective rates of $0.3652 and $0.4012 per $100. Coleman attributes this to those cities' more established commercial sectors and the amount of sales tax revenue they generate.
Pflugerville relies more on property taxes than neighboring Round Rock, which depends on sales tax revenue from Dell, Inc. for a large percentage of its general fund revenue. For 2009, only 14 percent of Pflugerville's general fund revenue will come from sales tax, and nearly half will come from property taxes.
City Manager David Buesing said cities like Pflugerville traditionally have higher tax rates to compensate for the lack of retail.
"We've got a rooftop market here and when that's mainly what you have, you have higher taxes," he said.
Coleman said even with higher property tax rates than nearby cities, Pflugerville homes are among the best values in the region.
"We feel like we have the most reasonably priced housing market in the northern Austin market," Coleman said. "You can buy more house [for the price] in Pflugerville than virtually any place in Central Texas."
Mixed messages
As the commercial sector develops in Pflugerville, the council wants to make the city a place where residents can also work.
"What we're really focusing on now is recruiting businesses that are going to bring employment bases into Pflugerville," Coleman said.
But as the city moves forward, Coleman said the council will do all it can to preserve Pflugerville's rural charm.
"Our goal is to maintain as much of that small-town, community feel as possible while implementing those aspects of a larger suburb, which are retail growth and commercial tax base growth."
The dilemma facing the council, Coleman said, is finding a compromise that satisfies citizens wanting lower taxes but not willing to see nearby green fields transformed into retail space.
"The city council receives a very mixed message depending on the project," Coleman said. "On one hand they say drop our tax rate and on the other hand they say don't change to do that, and we can't accomplish both things. We try to find a balance."
Source: Community Impact Newspaper
For additional information contact Phil Hutson @ www.showcaseofhomes.com.
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