WHITE OAK — White Oak City Council members have proposed a 2.6% increase in the property tax rate.
The 60.24-cents-per-$100 valuation rate is the city’s rollback rate — the highest rate the city can set before residents can ask for voter approval.
The proposed rate is 8% higher than the city’s effective rate of 55.778 cents, Assistant City Manager Melba Haralson said. The effective rate is the rate that would draw identical revenue next year as it did this year.
The rollback rate equals a tax bill of $602.40 for every $100,000 valuation on a property. The average home value in White Oak is about $148,000.
State-required public hearings on the tax rate are scheduled Aug. 20 and Sept. 3, both at 5 p.m. at White Oak City Hall.
In their monthly meeting Tuesday, council members mentioned needed street improvements — specifically on Old Highway 80 and West Whatley Road — as a factor in proposing the 60.24-cent rate.
The current year’s tax rate is 58.628 cents. Every penny on the property tax rate draws about $37,000 in city revenue.
Haralson has proposed a $5.869 million budget for next year that calls for a 0.4% spending increase over the 2018-19 adopted budget.
Property taxes are a significant revenue source for Haralson’s $3.41 million general fund spending plan that includes a 3% cost-of-living raise for employees and buys a new patrol unit and radio equipment for the police department.
Sales taxes are another revenue source to the general fund. While White Oak’s sales tax rebates are up 18% this fiscal year, City Coordinator Charlie Smith said rebates were down elsewhere in Gregg County and that a recent closure of the Fred’s store could affect White Oak’s future sales tax income.
“I don’t know what Fred’s is going to do to us because it was one of the top payers in there,” Smith said, adding that staff is talking with other retailers about coming to the city.
Haralson told the council that the recently approved Senate Bill 2 will place strong limitations on the city’s ability to raise taxes and afford street repairs.
Senate Bill 2 involves no petition. If a city wants to raise taxes higher than 3.5%, it must hold an election that November.
“The tax rate this year is critical to us moving forward, because if we go down on our tax rates this year, we wouldn’t be able to increase for street work or anything without an election,” Haralson said. “We wouldn’t be able to buy vehicles or do those kinds of things.”
Last year, Haralson calculated a conservative 95% collection rate on taxes. In this year’s spending plan, she used a 98% collection rate that is more on trend with actual collections in White Oak, she said.
Senate Bill 2 also will accelerate the timing of city’s budget season if it chooses a property tax increase above 3.5% in after this year.
“To have that November election, you have to call the election in mid-August,” Haralson said, “and you have to adopt the budget before you can adopt a tax rate, so everything is going to be done a couple of months sooner than now.”
She said the new law makes it seem as though state lawmakers are forcing cities to borrow money and incur debt, which adds interest to the money needed for infrastructure needs.
“If you have general fund debt, that’s set aside in a separate rate. That’s an interest and sinking rate, and that’s not calculated into your effective rate,” Haralson said, “so if we want to do some additional street work, this is the year to do it. This is our last chance to do it without having an election to fix the streets.”
In other business, the council agreed to a $50,000 White Oak Economic Development Corp. grant to Cherokee Steel Fabricators Inc.
The grant will help pay for $175,000 in equipment that Cherokee Steel needs and will result in a six-job expansion for the 50-year White Oak employer, Smith said.