Gainesville City Council is considering a decrease in residents’ city tax rate.
On Tuesday evening, Aug. 4, members of the Gainesville City Council unanimously approved a proposed tax rate of $0.6875 per $100 assessed property valuation. All council members were present for the vote during a regularly scheduled council meeting inside the Municipal Building, 200 S. Rusk St.
City Manager Barry Sullivan said the proposed rate is the no-new-revenue rate which was previously known as the effective rate — the tax rate needed to bring in the same tax revenue as the previous year.
The tax rate is broken up into two rates.
The proposed maintenance and operations tax rate is $0.4952, which is below the no-new-revenue M&O tax rate of $0.6035, according to Sullivan.
The proposed interest and sinking rate is $0.1923, he said.
The M&O tax rate supports day-to-day operating expenses. The I&S tax funds the city’s debt obligations.
“... Anything over $0.6875 would require a public hearing,” Sullivan told the Register via email Wednesday, Aug. 5. “Anything over $0.6984 would require a vote.”
Sullivan said because of the council’s request to be as conservative as possible with the budget, the city has been able to adjust with the times.
“For the previous two years we have done phenomenal on sales tax,” Sullivan said. “And we have brought in additional funds for sales tax because of the oil industry.”
He said city officials foresaw the collapse of the oil and gas industry and made adjustments in the budget to reflect that.
“Sales taxes are expected to decrease to $5,040,000 in Fiscal Year 2021,” Sullivan said. “This is a major decrease considering that in FY 2019 the city collected $7,633,744 in sales tax. This year’s (FY 2020) estimated collection for sales tax is $5,570,279.”
The city’s savings, he said, are helping to keep the tax rate steady.
“We are not raising taxes,” Sullivan said.
The approved proposed rate is a penny less than the current rate of 70 cents per $100 assessed property valuation approved by council last year.
The proposed rate of 69 cents per $100 valuation is not necessarily the final tax rate. That rate will be decided at a meeting beginning at 6:30 p.m. Tuesday, Sept. 15. Council can vote on a lower tax rate than the approved proposed rate but they cannot go higher, according to Sullivan.
The city’s fiscal year begins Oct. 1.