Fort Worth cut its tax rate for four years. Coronavirus brought an end to that.
Fort Worth’s general fund will be out a little more than $22 million this year from declining sales tax related to the recession, kicking off what could be five lean years for city coffers.
Despite a projection of stagnant growth, many homeowners will see no change to their property taxes in 2021.
The sales tax hole is smaller than estimated at the beginning of the pandemic when the forecast projected a loss between $35 million and $40 million for the general fund, the source of the city’s discretionary spending. While that’s good news, City Manager David Cooke said the recession will eat into the growth of the city’s tax base, so departments may have to pull back on some expenses.
Cooke has proposed keeping the city’s tax rate the same in fiscal year 2021, 74.75 cents. The owner of a home valued at $200,000 with a homestead exemption would pay $1,119.60 in city property taxes. For four years the city had reduced the tax rate, totaling more than a 11 cent reduction since 2017.
Those who saw a jump in their home’s appraisal are likely to see taxes go up despite the same tax rate. There is no change to water, sewer and other fees.
Cooke said the city could raise the rate by nearly 2 cents without calling an election, but he didn’t feel that would be proper. Unemployment is between 12 and 15%, he said, and businesses are closing “all the time.”
“I think you just have to be in touch with the context of the current economy,” Cooke told the Star-Telegram. “Why would we increase taxes to take away money from businesses and people? I think it’s the wrong time to even have that conversation.”
For years the city has projected 4% growth annually in property and sales tax revenue thanks to a robust economy that sees roughly 20,000 people move to Fort Worth a year. Cooke doesn’t expect the population to stop growing, but the tax base will shrink, he said.
Next year’s values are already locked in, but City Hall expects less than 1% growth in 2022 and minus-4% growth in 2023. The 4% growth is not expected to return until at least 2025.
In the short term Cooke said the hiring freeze, put in place in April, will continue likely through all of 2021. The city has roughly 300 open positions. Some positions may be eliminated, he said, but without layoffs.
Fort Worth received $158 million through the federal CARES Act stimulus package. Some of that money can be used to cover costs related to coronavirus such as Brandon Bennett, the city’s health officer, and others who have been working in the Joint Emergency Operations Center.
Many things will go unchanged next year.
The city is moving forward with opening two libraries: Golden Triangle and Reby Cary Youth Library. Plans for a southern police station and two new fire stations, one in the Walsh Ranch area and one at U.S. 287 and Harmon Road, will continue. A far north animal shelter, several park projects and the 2018 bond projects are also still on track, Cooke said.
These projects were already budgeted and contracted for, he said. Efforts to buy and preserve natural land as well as tackle the city’s outdated stormwater system should also remain intact.
How the city tackles future needs remains in question.
In 2022 the city will likely approach voters for a new bond proposal. Cooke last year floated the idea of adding a new City Hall and downtown library to the proposal, along with street and park improvements. These proposals will likely have to be revised as the city’s debt capacity has fallen by a projected $250 million, he said.
The city council didn’t comment on the proposed budget Tuesday during a work session.
More information about the city’s operating budget will be available Aug. 11 and a workshop about diversity and policing is planned for Aug. 14. The City Council is expected to vote on the 2021 budget Sept. 22. Budget hearings are scheduled for Sept. 1 and Sept. 15. Virtual town halls have not yet been scheduled.
