Council sets maximum tax rate

City Council took the first step toward setting next year’s property tax rate by voting Thursday to designate the maximum tax rate for Fiscal Year 2021-22 at 55.42 cents per $100 valuation. On a vote of 9-2, they followed staff advice and set the maximum tax rate that allows them the most flexibility. Council members Alison Alter and Mackenzie Kelly voted no.

As Mayor Steve Adler explained, “This is not deciding what the tax rate is, but it is deciding what is the maximum rate we could use.”

As Assistant City Attorney Leela Fireside explained, Council was required to set the maximum rate this month ahead of their adoption of any tax rate in August. This year’s maximum rate that does not require voter approval is 8 percent higher than last year’s because the governor issued two disaster declarations, one related to the Covid-19 pandemic and one in response to the impacts of Winter Storm Uri.

The city’s financial planners have recommended a budget that would raise taxes just 3.5 percent, setting the tax rate at 53.59 cents per $100 valuation. This is the maximum number allowed under state law without a vote or disaster declaration. This number is slightly lower than city staff members initially projected when City Manager Spencer Cronk laid out his budget earlier this month. The current rate is 53.35 cents per $100.

Kelly and Alter did not explain their opposition to setting the theoretical number. However, it is easy to imagine a future political opponent using the vote against a Council member, even if she did not ultimately vote for such a tax increase.

Council will take its first vote on the tax rate on Aug. 11.

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