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Analysis: City Could Have Lowered Taxes

You won’t pay more city taxes, but you might have paid less

By Walker County News Staff

The Huntsville City Council voted not to raise city property taxes last week.

Good news, right? Yes. But the best news would have been a reduction in the tax rate — something the Huntsville City Council could have just as easily done without sacrificing the current level of city services or freezing wages for city staff.

City taxpayers typically would have no reason to hope that property taxes will go down. The city raises taxes or holds them at the same level from year to year.  Only rarely has Council actually lowered taxes. In fact, the last time it did so was 13 years ago in 2003.

But something is different now, much different.

After years of consistent over taxation, the city of Huntsville now has more extra cash in its coffers than it has ever had before. In fact, if it wanted to, it has enough extra cash to completely suspend property taxes for a full year —maybe two — and not miss a beat.

But the council didn’t lower taxes last Tuesday night. Instead it voted to declare that the maximum tax rate it would adopt in fiscal year 2016-17 would be $.3809 per $100 of property valuation. That is, 38.09 cents for every $100 dollars worth of taxable property that a taxpayer owns. A taxpayer who owns a $100,000 house will pay $380.90 to the city in property taxes under the maximum rate.

Compare that $380.09 to what the taxpayer paid this year — $383.80 for a $100,000 house — and you see a reduction of only $2.90, or well under 1 percent.

City Council was able to make this slight reduction in the tax rate because the Walker County Appraisal District estimates that the appraised value of all taxable property in the city will increase by a small amount in the coming year.

Last year, some on City Council attempted to raises taxes by 7 percent while arguing that they were attempting no such thing. Before it adopted a budget for this fiscal year, Council said it intended to maintain the then-current tax rate. But, because the WCAD had raised the appraised value of taxable property in the city by 7 percent, the current tax rate was higher than the “effective rate,” or the rate at which the city could collect the same revenue it collected the year before. The “same” tax rate for the new fiscal year would have amounted to a tax increase.

The taxpayers who opposed the proposed tax hike at two public hearings last year made it clear they were not fooled. When it became obvious the public wasn’t buying the story that Council wasn’t really raising taxes, at-large Council member Keith Olson argued that the tax increase was fault of the appraisal district.

But state law makes it clear that it is the taxing entity — and no one else — that has the power to set the tax rate.

This time all of that was avoided. There will be no tax increase and no public hearings.

Council watchdog Ward 3 Council member Ronnie Allen was moved to compliment city staff for “getting it right this time.” That was the only public discussion at last Tuesday’s meeting, and council voted unanimously to approve the proposed maximum rate. Olson and Ward 1 Council member Joe Emmett were absent from the vote.

Council’s action Tuesday night only limited the tax rate on the upside. If it chose, Council could lower the rate below the declared maximum of $.3809 per $100 in property valuation. There’s been no hint, however, that Council is considering such action.

Good news, certainly. But taxpayers shouldn’t breathe a sigh of relief just yet.

Council is about to put a $85 million to $120 million bond issue on the November ballot. City staff and some on Council are poised to argue that the city can take on this huge debt without raising taxes in the future to cover it. That argument likely wouldn’t have much traction if the city attempted to raise taxes again this year.

One comment

  1. The City of Huntsville has plenty of cash in the bank but they are trying to reduce promised health insurance benefits for retirees and future retirees… Then they want the voters to OK a bond up to $124 MILLION so City Manager Matt Benoit can have a plush new corner office! NOT WHILE I LIVE IN HUNTSVILLE!!! Vote “NO” on all bond propositions!!! PEOPLE FIRST!!! (Especially Police and Firefighters who risk their lives to protect ours!!)

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