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HomeMy WebLinkAbout08/27/1986 - Special Minutes City Council MINUTES CITY COUNCIL SPECIAL MEETING WEDNESDAY, AUGUST 27, 1986 7:00 P.M. COUNCIL MEMBERS PRESENT: COUNCIL MEMBERS ABSENT: STAFF PRESENT: VISITORS PRESENT: Mayor Ringer, Councilman Jones, Tongco, Bond, Brown, Haddox, Boughton None City Manager Cole, City Secretary Jones, City Attorney Locke, Deputy Finance Director Schroeder, Council Coordinator Hooks See Guest Register. Agenda Item No 1 - A public hearing on proposed tax rate. Mayor Ringer stated that the tax roll has been finalized and calculations have been made to establish the effective tax rate. He asked Glenn Schroeder to review the calculations and compare the effective tax rate to the actual tax rate. Glenn Schroeder, Deputy Finance Director, explained that the ef- fective tax rate calculation determines the tax rate which would generate enough money to service the general obligation debt for the upcoming fiscal year and additionally generate for the gen- eral fund the same amount of revenue as added to the general fund by property taxes in the prior fiscal year. Additional items, such as new improvements, exemptions, annexations, etc., are considered in the calculations. He noted that the effective tax rate derived for College Station is 33.86 cents per $100.00 valuation. Mr. Schroeder pointed out that the effective tax rate does not allow consideration of the fact that 100% of levied taxes will not be collected. In the past, the city has estimated that it collects an average of 95% of taxes levied. He noted that the effective tax rate does not allow a "build-up" of reserves in the debt service fund. He stated that the staff is recommending a tax rate of $.38. 005835 CITY COUNCIL SPECIAL MEETING WEDNESDAY, AUGUST 27, 1986 PAGE 2 Mr. Schroeder passed to council a description of taxes levied. The total tax levy on the basis of tax value will be $4,252,569.00. He stated that the makeup of tax levy at the ef- fective tax rate of .3386/$100 will be $3,567,774.00 for debt service and $218,501.00 for the general fund. In addition, the levy above effective tax rate .0414/$100 at 5% uncollectible will total $212,628.00; the debt service reserve is $253,666.00. Councilman Haddox asked how much money went to the debt service reserve. Mr. Schroeder replied that the debt service fund bal- ance ending June 30, 1985 was $1,700,000.00 and the debt service fund balance as of June 30, 1986 was $2,020,000.00. Councilman Haddox asked if the debt service amount is related to the bond rating. Mr. Schroeder replied that the bond rating agencies like to see a year of reserves in the debt service fund. Mr. Cole ad- ded that the rating agencies look very closely at the debt ser- vice requirements in a municipality, which is the basic respon- sibility in budget procedures. Mayor Ringer opened the public hearing. Percy Mims, 501 Dexter Drive South, asked Council to consider the actual needs of the City, and not be concerned about a surplus of reserves. John Edwards, commented on use of the school district's taxes. Mayor Ringer pointed out that this public hearing covered the city tax rate and not the school district's taxes. Councilman Haddox asked Mr. Schroeder to announce to the audience the present tax rate. Mr. Schroeder stated that the actual tax rate last year was $.38/$100 evaluation and the proposed tax rate is $.38/$100 also. Generally, valuations of properties have stayed the same as last year's valuations. On this basis, total tax levied last year was $4,100,000.00 and total this year is $4,202,000.00 which is a 2.1% increase in dollars levied against properties in the ad valorem tax. He added that the actual tax rate is the same and dollars levied by ad valorem taxes would increase 2.13%. Mayor Ringer pointed out that the change in the effective tax rate is the combination of an increase of property values asses- sed, a decrease in amounts for debt service, and the calculation which assumes 100% taxes are collected. Councilman Haddox asked for an explanation of the bond rating if the effective tax rate were lower and the reserve, smaller. Mr. Schroeder replied that he was not sure of the agencies response to this situation. Mr. Cole pointed out that the bond rating agencies will rarely tell municipalities the reason for thei~ 905836 CITY COUNCIL SPECIAL MEETING WEDNESDAY, AUGUST 27, 1986 PAGE 3 rating. He added that the elimination of debt service reserves would possibly lower our bond rating. Councilman Brown asked if the City has AA bond rating. Mr. Schroeder replied affirma- tively. Mr. Brown also asked for the amount of reserve at the time of the last bond market. Mr. Schroeder stated that he was not sure, but he believed the figure was close to $1,000,000.00 for the 1983 bond market. He added that the biggest portion of the debt requirement at this time is because of the 1984 issue, and the city is continuing to build the reserve. Councilman Brown asked Mr. Schroeder to provide Council with the figures from the last bond market. Councilman Bond commented that he did not recall the issue of debt service reserve having been brought before council last year. Councilman Haddox asked if the tax rate increased last year from the year before. Mr. Schroeder replied two cents for the proposed library. Mayor Ringer closed the public hearing. Agenda Item No. 2 - Consideration of date to vote on 1986 tax rate. Councilman Brown moved approval for Thursday, September 11, 1986 as the date to vote on the 1986 tax rate. Councilman Boughton seconded the motion which was approved unan- imously, 7-0. Agenda Item No. 3 - Adjourn. Mayor Ringer adjourned the meeting at 7:35 p.m. ATTEST .' Dian ~ones/, City Secretary APPROVED: 005837 GUEST REGISTER SPECIAL CITY COUNCIL MEETING August 27, 1986 7.'00 P.M. 18. 19. 20. 21. 0 22. 23. 24. Se 25. e 26. 10. 27. 11. 28. 12. 29. 13. 30. 14. 31. 15. 32. 16. 33. 17. 34. 005.838