City holds public hearing on tax rate
The city of Breckenridge held a public hearing for the proposed tax rate of $1.02 per $100 valuation Tuesday, Aug. 30, a rate which will raise more tax revenue than the previous year despite dropping from last year’s rate.
Steve Norwood, Breckenridge Interim City Manager, led the meeting Aug. 30 and stated that no items were to be acted on by the council during the meeting. On Tuesday, Sept. 6 before press time, a public hearing was held regarding the budget and following that meeting both the budget and tax rate were to be considered for adoption from the city commissioners.
“Our property tax rate currently is $1.06 (per $100 valuation). We're proposing it to go to $1.02 (per $100 valuation). (...) There's two components of the tax rate. One is an M&O, maintenance and operations. And then there's the I&S, or interest and sinking. Most people today just call it your debt service tax rate, so that ($1.06) is made up of two numbers. Currently, it's at $0.76 for the maintenance and operation, and the debt portion is ($0.299). So just right under $0.30,” Norwood said. “What we're proposing is keeping the maintenance and operation (...) would stay the same, that's $0.76, the debt service would drop from about $0.30, down to about ($0.25) and some change. So the net effect is right at a four cent reduction, with that reduction all coming on the debt side. So you would be looking at ($1.02) on the property tax rate. That includes both maintenance and the debt. And the debt is always very important, because that comes right off the top. That's the first thing that goes and whatever's left, you basically have that for operations.”
The proposed tax rate of $1.02 per $100 valuation is dropping from last year’s rate of $1.06 per $100 valuation, or total tax revenue increase of $323,007. The total tax levy on all properties increased from $2,229,745 in 2021 to $2,604,158 in 2022, or an increase of $375,413.
The average homestead taxable value moved from $68,782 in 2021 to $88,085 in 2022, or an increase of $19,303. Taxes on the average homestead within the city also increased from $729.09 in 2021 to $898.47 in 2022, or an increase of $169.38.
The proposed tax rate is under the voter approval tax rate of $1.22419 per $100 valuation and above the nonew revenue tax rate of $0.85851 per $100 valuation. The voter-approval tax rate is the highest tax rate the city could adopt without holding an election to seek voter approval of the rate. The no-new tax rate is the tax rate for the 2022 year that will raise the same amount of property tax revenue for the city from the same properties in both the 2021 and 2022 tax years.
Community member Laura Gibson asked why the city would reduce the debt tax rate if the city still has outstanding debt payments. Gibson also asked if the revenue from a higher debt rate could rollover into the existing debt and expedite the payment process for the city.
“We're always gonna have debt, but we are paying off some additional debt. That is, we're being able to retire that debt early and we're also going to be retiring from paying down some other debts. So that's a good position to be in to be able to start paying this debt off earlier (...),” Norwood said. “(...) That (raising of the debt rate) basically upsets the entire calculation then it puts us into a position of calling an election of the voters because we're raising the tax rate too much. Because what it basically says is, 'We've got more than enough money to pay for the debt. So why are you still, you know, having this extra (...) taxes?' So it's been changing about every two years for the past eight years and it gets more and more complicated as we go. But we are being able to reduce the debt, thus being able to reduce the tax rate accordingly.”
He said moving the rate too high would place the city into a rollback position where they would have to call an election and readjust budgets depending on if the election measure passed or failed. Norwood said keeping the rate the same as last year at $1.06 per $100 valuation would also have an impact on the calculations overall.
“Anytime you start moving those numbers it grossly affects those calculations. So by us reducing the debt, that gives us a little more flexibility on the operation side. If you put more on the operation, because (with) the state and their calculations they're more concerned about us having more money on maintenance and operation than debt. Because debt, that's a legal obligation. On your maintenance, there's not a legal obligation. I mean, we're not legally required to have a police and fire department. So they watch that calculation. I mean, you can move those numbers two, three pennies and it drastically changes.”
The city hosted a public hearing Tuesday regarding its proposed budget which will raise more total property taxes than last year’s budget by $342,654, with $5,496 from new property added to the tax roll, according to their public notice. The proposed fiscal year budget runs from Oct. 1 through Sept. 30, 2023. A total of $4,719,612 was proposed for the general fund, $2,438,349 was proposed for the water fund, $1,364,770 was proposed for the wastewater fund and $526,161 was proposed for the sanitation fund.
Also proposed in the budget was $1,000 in the fire department special fund, $17,500 in the cemetery trust, $286,382 in the equipment replacement fund, $250,000 in the street maintenance sales tax fund, $1,000 in the Breckenridge park fund $565,000 in the capital improvement project fund and $553,754 in the general debt service fund.