by SEAN KIMMONS

In a financial twist, Kyle residents will now pay almost four cents less in property taxes next year compared to the three-cent hike first proposed in July.

On Tuesday night, the Kyle City Council approved a revamped Fiscal Year 2010-11 budget, which lowers the tax rate to 41.54 cents per $100 property evaluation. The first proposed budget had a tax rate of 45.39 cents and the current tax rate is 42.4 cents.

“Now we’re looking at a tax decrease,” Interim City Manager James Earp told the council.

The lower tax rate was made possible in part from the council’s earlier decision to reapply $2 million bond from a 2008 bond to buy land for an economic development park.

The funds will be re-appropriated and include $400,000 to help pay for the new library infrastructure and Burleson Road sidewalk project. In addition to the impact seen in this year’s tax rate, the move also allows for a 3.2 cent decrease in property taxes over the next four years, officials said.

Seemingly a win-win situation, the decision still worried a few councilmembers who wanted to rein in spending even further.

“This is a good option. However, it brings about some big concerns,” Councilmember Brad Pickett said.

Pickett, who voted against the move along with Councilmember Jaime Sanchez, said that he was wanting to put money away in escrow to pay off future debt and is concerned about the restrictions that forbid the council to pay off debt already accumulated. Plus, councils, years from now, could tap into the funds to pay off other items, he said.

The revised annual budget stands at $54.6 million, with the combined operating budget at $22.1 million, or 41 percent of the total. The first proposed annual budget was $56 million in July.

The budget, which has an emphasis on the understaffed Kyle Police Department, includes at least 10 new city job positions, with about half of those jobs expanding the police force. The approved budget also includes about $200,000 in pay increases for the police department.

In previous budget workshops, councilmembers spent hours trimming the proposed budget by more than $257,000.

Despite cuts from the council, Councilmember Russ Huebner has said that the property tax rate could potentially double in the next six years due to a variety of factors.

A few, he said, are debt obligations from the last eight years of issuing Certificates of Obligation that need to be paid, the formation of the Hays-Caldwell Public Utility Agency, increasing maintenance and operations costs of the growing city; and the unsustainable method of subsidizing the city’s property tax rate by transferring money from the utility fund.

At the meeting, he cautioned about the future when the newly founded tax rate cuts end.

“My biggest concern is what the tax rate will look like four years from now,” he said. “It’s going to give us a false sense of security. We still got a big hill to climb.”

Earp said that the move will keep the tax rate lower and hopefully when the cuts run out, the economy will have picked up again, bringing more revenue to the city.

Previous city councils have doled out $73 million in debt as the city tried to keep up with its ongoing growth, projected to have surpassed more than 30,000 residents.

By Sept. 30, the city’s outstanding debt will shrink to around $68.7 million, city officials say.

Furthermore, Kyle residents are projected to pitch in around $34 million to lay down the infrastructure of the Hays-Caldwell Public Utility, which will pipe in drinking water from the Carrizo-Wilcox Aquifer at least 40 miles to the east.

In 2007, Kyle partnered with San Marcos, Buda and the Canyon Regional Water Authority to create the agency, which oversees the $120 million project. The first phase is slated to come online in 2015.

Budget documents are available at www.cityofkyle.com.

By the numbers…

City of Kyle tax rate:
2010/11 – 41.54 cents
2009/10 – 42.40 cents
2008/09 – 37.31 cents
2007/08 – 27.07 cents
2006/07 – 27.24 cents
2005/06 – 27.77 cents
2004/05 – 28.71 cents

Read more:

• Buda examines budget: Tax rate up despite cuts, delayed projects  09/1/2010
• Kyle foresees 3 cent tax hike  07/21/2010
• Kyle balances budget and lowers taxes  09/22/2010
• Hays CISD Board of Trustees approves eight cent tax rate hike  09/24/2005
• Hays CISD Board of Trustees approves eight cent tax rate hike  09/23/2005