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Rollingwood City Council to discuss high taxes, lower sewer rates
Sunday, August 22, 2010
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The Rollingwood City Council is currently reviewing a proposal that could reduce residents’ wastewater bills by increasing their property taxes.
The proposal was brought to council by Alderwoman Sara Hutson and was discussed at a special meeting last week. The proposal will be a part of future budget discussions, she said.
“People are very concerned about their sewer rates,” Hutson said.
Currently, Rollingwood residents pay a $65 base rate to help fund the capital improvements to the wastewater system installed by the Lower Colorado River Authority. In addition, a portion of the usage rate also goes to pay for those improvements.
Under Hutson’s proposal, the base rate would be eliminated, and the usage rate would decrease as funding for the capital improvements would be taken care of with an additional 17.5 cent per $100 valuation property tax levy. Rollingwood currently taxes its citizens at 11.16 cents per hundred dollars of valuation.
Currently, there are a number of properties in the city that are not hooked up to the sewer system or are not paying bills, Hutson said, including vacant lots and developer inventory lots. By shifting capital improvement charges to property taxes, this proposal would force owners of these properties to pay for sewer improvements that have increased property values, she said.
“Putting it on property taxes puts everybody paying for that system,” Hutson said.
In addition, many Rollingwood residents would end up paying less. Hutson said that based on the average home value in Rollingwood, most homeowners would see a reduction, especially if they itemize their federal income tax returns because property taxes are often deductible. Those with high-value homes will likely see an increase in what they pay overall.
“Some people will pay more, most will pay less or break even,” Hutson said.
The real winners in this proposal will be commercial properties, said Alderman John Hinton, who also ran the numbers on the proposal but has not formally offered his support.
“Commercial properties will be greatly benefited by this,” Hinton said.
Currently, commercial wastewater customers pay $130 per month per living unit equivalent as a base rate, plus per gallon usage charges. The property tax levy would reduce what they pay, especially in light of falling commercial property values.
This is not the first time such a proposal has been discussed, both Hinton and Hutson said, but this is the furthest it has gotten with the council and is likely to be a part of the budget discussion for the next six weeks. In past years, the proposal was introduced too late in the budget discussion and was often tabled.
If the proposal moves forward as part of the tax rate, it would put the city’s rate over the rollback rate, which would allow residents to circulate a petition and potentially call an election to repeal the rate.
“I hope that we are able to take a look at the options and see if it addresses the primary concerns of the residents,” Hutson said. “I don’t want my taxes to go up either, but nobody likes the wastewater rates being this high.”
SARAH HUTSON’S SEWER RATE PROPOSAL WILL TRIPLE YOUR PROPERTY TAXES!
In an attempt to demonstrate a savings to individual residents from recouping sewer costs through the property tax, Sarah Hutson has prepared a seriously flawed spreadsheet that drastically understates the property tax increase necessary to achieve her sewer rate proposal.
Sarah calculates the property tax rate increase by dividing the $775,000 capital charge the City pays to LCRA by the total of Rollingwood’s 2009 property tax values, resulting in a property tax rate increase of $.172/$100 (raising the tax rate 150% from $.112/$100 to $.284/$100). She compares this property tax increase for individual residents to a sewer rate decrease that includes both the elimination of the $65/month capital charge and a 40% decrease in the winter average (volume) charge. But the revenue loss caused by elimination of the capital charge and a 40% decrease in the volume charge is much, much greater than the $775,000 she used to calculate the property tax increase. The City will have to come up with the revenues to pay for its sewer costs from somewhere – if not from sewer rates, then from property taxes.
While Sarah says that commercial customers would have to be given corresponding rate decreases, she claims to be unaware of the consequences of either the residential volume (winter average) rate decrease or the corresponding commercial volume charge decrease and elimination of the commercial capital charge. But the sewer revenue reduction from these proposals is easily calculated from the analysis presented by the City’s rate consultant in June, 2010. Elimination of the capital charge (residential and commercial) would reduce revenues by $693,311, and a 40% reduction in the volume (winter average) charge would reduce revenues by $229,223.20, for a total of $922,534.20. To replace these lost revenues with property tax revenues, the tax rate would have to be raised by $.209/$100 (not $.172/$100), almost tripling the property tax rate from the current $.112/$100 to $.321/$100.
The correct calculation to figure out the effect of Sarah’s proposal on you is as follows: (1) multiply your current property valuation by $.209/$100, (2) then subtract $780 (=12x$65), and (3) then subtract your winter average gallons (in 1000’s) times $4 times 12. If your home valuation is more than $511,004 and your winter water usage is average, then you will be worse off under Sarah’s proposal. (Residents who conserve water in the winter will be penalized even more.) So who benefits from Sarah’s proposal? The answer is clear — commercial customers.
You will receive no federal income tax benefit at all unless you itemize deductions. If you itemize, because of deduction phase-outs and ceilings, the alternative minimum tax, and varying marginal tax rates, you will have to rerun you tax return with a larger property tax deduction to see if you will receive a tax benefit. Many residents who itemize deductions will receive no benefit at all.
The additional burden on residents will compound in the future as property values increase. If property values go up 10% next year, your already tripled property tax will rise 10% more with no corresponding reduction in your sewer bills.
Sarah can pander to the public by presenting bogus numbers to make people think that only rich people will be harmed by her proposal. But the cost of our sewer service will not disappear and must be paid for out of revenues from some source – property taxes or sewer rates. Ultimately, residents will be left holding the bag. Roxanne McKee’s effusive adulation of Sarah for finally bringing us numbers showing the effect on every resident of collecting sewer costs through the property tax is entirely misplaced. If it looks too good to be true, it probably is. Do the Math.
As I stated at the meeting, the City Council is in the early to middle stages of examining the math and I appreciate that Sara took the effort to list each home in Rollingwood in a spreadsheet, performed some calculations, and presented it to the public for input. It was made clear at the meeting that the spreadsheet presented was a Draft only, not a final product. Sara also invited anyone to contact her personally about this matter, which is something that I applaud.
In my opinion, it would be better to voice one’s concerns and suggestions at City Hall where Council members and the public can openly exchange ideas and weigh the pros and cons of proposals. To sit quietly at meetings when you clearly have different ideas and wait until you have the opportunity to blog anonymously and cast aspersions on Council members’ alleged motivations is unproductive and divisive. We need to move forward in an open, positive way and reject politics as usual.
Sarah has been unabashed in stating that her purpose is to charge owners of expensive houses more, stating that expensive houses could not have been built except for the sewer system. But under her proposal, owners of modest homes would pay more, too. That is what Sarah’s spreadsheet misrepresents. If Rollingwood residents want to pay more so that commercial sewer customers can pay less, they should make their views known to the City Council. But they should know the facts so that they can Do the Math.
Most Rollingwood residents cannot attend City Council meetings and have no source other that the Picayune to find out what members of the City Council are proposing. Kudos to the Picayune for providing a forum for the exchange of information about City government. If Ms. McKee wants the public to know about what Sara is proposing, perhaps she should instruct the City Staff to mail the Picayune article and Do the Math’s blog to everyone in Rollingwood.
But Roxanne, didn’t you “cast aspersions” on another council member at the July meeting? Why are you immune? Yes, we do “need to move on in an open and positive way and reject politics as usual” as you say. That goes for you as well, I believe.
What happens when Travis County Appraisal District catches up with the accurate appraisals of all the Rollingwood remodels? Will that wake people up? What happens when those values change next year, and then at 10% max per year each year after that? Our property taxes with wastewater costs (conveniently attached without any controls) will be horrendous. It is easy for me to do the math on my home. My wastewater costs will double now, and then of course will go up each year after that. Perhaps Alderwoman Hutson’s will go down or not be affected, and I guess that is nice for her and her family. But what about others?
I am against this abusive taxation; it is Alderwoman Hutson’s “get the nice homes” attitude that will unfairly force those homeowners to pay more for the same utilities regardless of usage.
Roxanne and Sara, wake up and start representing the taxpayers and voters of our small community.
Ms. McKee, the problem here is the presentation by a city council member of a bogus analysis put forth in support of an ill-conceived proposal. The analysis purports to state the effect on citizens’ taxes of adoption of the proposal and is offered to in support of the proposal. But the information presented by the council member is not factually correct but instead severely understates that effect. How does the presentation of a flawed analysis and wildly misleading arguments foster open exchange of ideas and productive weighing of the pros and cons of proposals? Citizens expect unbiased facts and factual analysis from city officials. They certainly would be startled by your idea that it is not city officials that are responsible for providing accurate facts and competent analysis to citizens about city operations but the reverse.
When council members urge actions having very serious consequences for all citizens such as those urged by Ms. Hutson, citizens expect that these proposals would be grounded in facts and an understanding of the consequences for all citizens. And citizens expect that proposals by council members be grounded in careful, competent, impartial analysis—not based on the self-interest, ideology, misconceptions, or idiosyncratic situations or desires of a few. Moreover, such proposals should be made only because they implement the will of the community as a whole—that is, on the basis of the consensus of the community.
Politics as usual in Rollingwood is attempts by the city administration to take actions which would not garner public support if true facts were known. Politics as usual in Rollingwood is the failure of those in government to respect the citizens. This requires fewer lectures from city council members to citizens like those in your blog. And you might refrain from rolling your eyes when citizens appear before the council to try to provide you with their input.
My guess is that regardless of how unpopular (and stupid) this proposal is, both Ms. McKee and Ms. Hutson will continue to push and push angrily on this item, and then blame the eventual “block” of three votes for its defeat. What they should “blame” is the gosh darn will of the people.
Ms. McKee’s attitude towards the people, as evident in her comments and actions, is unfortunate. Rolling her eyes at a citizen who comments in a council meeting, and then always criticizing the citizens for their frustration and open commentary, is shameful.
Get a life people, you seem to have way too much time on your hands, you seem to be bashing the idea just for the sake of bashing, go back and finish watching dancing with the stars and the bachelor and shut your uneducated mouths.
Bashing for the sake of bashing?? Or looking at the numbers, Mr. Carroll. By the way, you seem upset, and quite obnoxious. Is there a reason for your anger?
I prefer educated discussion as opposed to anger with no argument to present.