Sumter warns of possible increase in county tax rate

Note: One of the most disturbing aspects of having to listen to commissioners discuss their multi-million dollar projects and the implications on next year's county budget was that nary a word was said about the plight of hard pressed home and business owners. Only Judge Sumter came close. Commissioners speak of tax rates and appraisals – a one or two penny increase in the tax rate – as though it's no big deal. Business owners and average folks speak of 30% drops in sales, meeting the next payroll and layoffs. Many people are living on fixed incomes. Get real guys, you are not 'serving the people well,' as Commissioner Conley so fondly believes, if you are entertaining even the idea of an increase in the tax rate. Let's hear less about what great jobs you're doing and more about how you intend to reduce your expenditures and our taxes.

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By Bob Ochoa
RoundUp Editor

Hays County Judge Liz Sumter warned this week that even in the best of scenarios, including a 2.5 percent growth in property appraisals, the county may be forced to raise its tax rate by slightly less than a penny in next year's county budget.

"If we borrow everything we're scheduled to borrow, we're looking at (a tax rate of) 47.63 cents, based on a 4.5 percent interest rate," Sumter said. "It's a guess, a projection of what we will be looking at. It is a growth rate that I don't think anybody is anticipating."

In worst case projections, with growth flat or a dip of one percent, Sumter says the county is looking at increases in the tax rate of slightly more than a penny, up to 48.11 cents. The current tax rate stands at 46.92 cents per hundred valuation, a 1.42-cent increase from the prior year's budget.

"What I'm hearing from people is that they are already stretched as far as they can be stretched," said Sumter. "I still think the commissioners court hasn't addressed the overall issue of how do you move forward with these projects without increasing taxes."

Commissioners and the judge discussed their options at a mini-budget workshop Tuesday Jan. 26 during their regular meeting, far ahead of their normal budget deliberations that start in earnest in the summer. Their plate is loaded with expensive capital projects, including construction of a $72 million government center, parks and road bonds yet to be sold totaling about $70 million, improvements to the jail and possible construction of a new jail with projected costs of between $50 million and $60 million.

Two years ago, voters approved $207 million in road bonds and $30 million for parks and acquisition of open space. Voters were informed then that approval of the bonds would likely result in a 5.1 cent increase in the county's tax rate, spread out over several years.

"Yes, the citizens had full knowledge the rate would go up for the roads and parks," said Sumter. "However, the variable today is the economy itself. No one could have predicted . . . that the economy would have gotten this bad. Even if the court has dictated to go ahead, the question is whether or not this is the right thing to do at this time. Do I think we should raise taxes? Not at this time. If that means slowing down some of the roads or pushing money to another location, then I think that's what we do."

Much of Tuesday's abbreviated budget discussion centered on whether to proceed with construction of the new government center. The project has not been brought to voters for approval, although county officials pointed out it has been under discussion for several years. Its total cost has been pared back from $90 million to a little more than $72 million.

"We built in the cost in the budget five years ago," said Precinct 1 Commissioner Debbie Ingalsbe of San Marcos. "If the growth rate decreases or stays flat, in either scenario, we have the money budgeted."

Dan Wegmiller, the county's bond and financial advisor, presented commissioners with a flex bond sale schedule, with one option to sell the entire $72 million in certificates of obligation and another to split the sale over two years at $60 million and $12 million. "At current interest rates we're still at 4.5 cents (portion of the tax rate), or below, so we're within budget," he said.

Precinct 4 Commissioner Karen Ford of Dripping Springs touted the efficiency the government center will bring to the county by housing many offices and courtrooms in one building. Ford said, "the choice we have today is one big (bond) issue that takes up pretty much all of that 4.5 cents and not leaving much cushion for implications of what our road bond is taking. We could absorb that next year and not have a tax increase next year. It's just a matter of how you manage your debt (issuance)."

Commissioners later voted unanimously, on a motion from Commissioner Ingalsbe, to publish the court's intent to sell $72 million in bonds in late March for the center's construction, with the understanding the sale would be subject to change.

"A week before the sale we'll know what the interest rate will be and come back to the court and go through the same exercise to figure out what the impact will be," said Sumter.

The county's projects building manager Bob Hinkle of Broaddus & Associates, Austin, informed commissioners that a mock up model of the government center is being constructed at the San Marcos Airport.

Commenting generally on the discussion, Precinct 3 Commissioner Will Conley said, "I want the public to know we're on top of the issues, on the road bond issues, making sure they were fully informed of the worst case scenarios. We're coming in under (cost estimates), we are getting low interest rates and we are getting low bids. Where I think we need to have a thorough discussion, and a real area of concern, is when the costs of the government center, or anything, is going (over budget). There are many paths we can go down. We have planned accordingly and have served the people of Hays County well through those plans."