Outgoing financial officer presents options
Six different scenarios presented by Taylor’s outgoing finance director showing how changes in property values might affect tax rates has the City Council mulling various options to offset next year’s budget.
During a session Jan. 9, Chief Financial Officer Jeff Wood gave city leaders an idea of how tax rates could shift based on current information.
Property values are expected to remain flat compared to last year, and with the sales-and-use tax income falling, action will be needed to balance the tax revenue and the budget, council members learned.
Increasing the tax rate is one option.
Wood said the difference between what the city collected in last year’s sales-and-use tax versus what is projected for this year equates to about a 10-cent difference in the tax rate.
“Use tax has become nonexistent in the last four months. So this number is trending lower than what we had budgeted,” he said.
Wood, who is retiring, has been the Taylor finance director since 2019 and helped with the city’s efforts to bring the $17 billion Samsung Austin Semiconductor facility to the area.
He left the council with some parting advice.
“You just need to do what you’ve been doing. You can’t stop growth,” he said. “City government is going to grow as the city grows. Your budget is going to grow.”
During this final appearance before the dais, Wood added, “Don’t get freaked out because your budget is bigger than it was two years ago. That’s a natural occurrence in a growing city. Just continue to be smart with your decisions.”
Wood during the meeting also recommended delaying the start of the 2025 debt issuance.
“This isn’t to scare you or to cause fear or alarm. This is more information,” Wood said. “We just want to get it on your radar as you go into this next budget season.”
Council members’ concerns at a debt workshop in October prompted the Jan. 9 update. The city’s current list of capital-improvement projects needs $20 million in tax-supported debt issuance, with an Intent to Issue resolution to be approved this
month. The CFO said the finance department now recommends waiting until late March for approval and making it an “up to” amount rather than the full amount of $20 million.
This allows the council to approve the final amount of debt to be issued after preliminary property values are provided by the Williamson Central Appraisal District.
The update also was needed “in response to the decline in sales/ use tax that the city is currently seeing due to construction at the (Samsung) facility starting to wrap up,” said city spokesman Daniel Seguin. “The city anticipated this decline and has put in mechanisms to prepare for the deficit from this decline.”
A “use tax” is levied when a buyer purchases taxable goods and services from outside of Texas (thereby avoiding state sales tax) but then stores or uses it in Texas.
Large companies such as Samsung purchase a lot of specialized equipment and construction material they would owe sales tax on if bought locally or use tax on if purchased outside the state.
Cities receive a portion of the sales-and-use taxes collected inside city limits.
Wood said when industries bring in high salesand- use tax revenue to the city, it lowers the city’s dependence on propertytax income. Most of this tax is paid during construction when the newest equipment and materials are bought.
Use tax declines as purchases decline. The reduction in sales-anduse tax can then drive property tax back up as the city’s revenue stream shifts.
“The last couple years we’ve been setting aside the use tax that we’ve received, that halfpenny worth of use tax, for property-tax relief. We’ve been setting that aside and banking it. We have approximately $8.7 million that we have saved from use tax for this very purpose,” Wood said.
According to the finance officer, “We’ve prepared for this, we’ve been talking about this, we knew it was coming, we set that money aside so that we had a pool of cash to be able to supplement the budget for a year or two or three until we got franchise fees and such from Samsung when they’re up and running.”
