The Brownwood City Council will hold a public hearing at 9 a.m. Tuesday on the city’s proposed $34.35 million budget for the 2017-’18 fiscal year, and with two key revenue sources diminished — sales tax and water sales — the council is proposing the city’s first property tax rate increase since 1999.
    Utility fee increases — while still present — are smaller than initially proposed, and a proposed stormwater drainage fee has been eliminated.
    The proposed budget is $770,979, or 2.3 percent, higher than the current budget. The new budget will be adopted on first reading Sept. 19 and second and third/final readings Sept. 26.
    Since 1999, the property tax rate has decreased from $.7946 to the current rate of $.7463. The council proposes going back to the 199 rate, an increase of 6.5 percent.
    City Manager Emily Crawford’s office issues a press release earlier saying the council had made changes to Crawford’s proposed budget following budget workshops.
    The budget underwent additional cuts and revenue sources were adjusted. Instead of multiple fee increases, the council is proposing a .0483 cent tax rate increase and a few small utility fee increases.
    The overall monthly impact of the proposed tax and fees is about $7.05 per household, the release stated. For residents with the over 65 and disabled tax freeze, they will not pay any additional property tax.  
     According to the city website www.brownwoodtexas.gov/budget:

Bottom line
    The Brownwood City Council is proposing a tax rate increase for the first time since 1999. Two of the city’s largest revenue sources have decreased greatly, while expenses outside the city’s control have increased dramatically.
     Extensive cuts were made to the proposed budget, but cuts alone could not balance the budget.    

Increased expenses
    New state mandated TCEQ wastewater treatment regulations required the city to upgrade the 50-year-old wastewater treatment plant, costing $6.5 million. Funds were issued from a Certificate of Obligation with an annual debt service payment of $338,516.
     In addition, the City of Early is building its own wastewater treatment facility, which will result in the reduction of revenue to the City of Brownwood of approximately $252,000 per year.
    Employee health insurance rates increased 14 percent or $271,457. There is no cost of living raise for city employees in the proposed budget.


Lost Revenue
    On the revenue side, changes in consumer buying habits and water use have impacted the city significantly. The drought from 2011-2014 taught residents how to conserve water, and water use is 23 percent less than pre-drought levels.
     The budget projects a revenue reduction of $317,000 in water sales, which previously made up 21 percent of the city budget. That amount is now about 18 percent.
    Shopping habits have changed globally. Increased online shopping caused several national retailers to close small market stores, including five stores in Brownwood. Sales tax revenues have historically funded 17 percent  of the budget. With the overall reduction in sales tax revenues, the city anticipates this to be about 15 percent, a reduction of more than $412,000.
    
Replacing revenue: fees vs.  tax rate
    Council considered several options to replace the revenue shortfall. One was a 5-10 percent increase in fees, such as water, sewer, sanitation, landfill, facility rentals and permit fees. One was an increase in property tax rates only, and one was a combination of fees and taxes.
     The council determined a combination of small fee increases and the first property tax increase in 18 years as the most equitable solution.


Property Tax
    Since 1999, the property tax rate has decreased from $.7946 to the current rate of $.7463. The council proposes going back to the 1999 tax rate, which is an increase of 6.5 percent.
    The primary reason is that property tax is a more stable funding source. It does not fluctuate like water sales and sales tax revenues. Secondly, it is more equitable to all citizens. Residents with lower property values will actually pay less in property taxes than they would in across-the-board fee increases.
    Seniors and disabled who qualify for a tax freeze will not be impacted by the tax increase, benefiting people on a limited income. After analyzing several households based on property values and utility used, the city discovered many citizens will actually pay less with a property tax increase and small fee increases than if water, sewer and sanitation rates were all increased by 5-7 percent.


Sanitation and landfill
    The fee increases proposed include a 4 percent increase in sanitation rates to cover the cost of two new trash trucks and increased maintenance on an aging fleet of trash trucks. This would add 84¢ per month to a residential bill.
     Sanitation rates have not changed in five years.
    The budget also proposing an increase in the landfill gate rate from $40 per ton to $42 to dispose of waste at the landfill. The landfill rate has not increased in nine years.


Water consumption and sewer
A small increase of 1.8 percent on the water consumption rate will be required to cover the Brown County Water Improvement District water rate increase.
    That will raise the average residential water bill (10 units) by 40¢ per month.
     The sewer rate will go up 8.4percent or 26¢ per 100 cubic foot, raising the average residential sewer payment $2.08 per month to pay for the plant renovation.  

Overall monthly impact
The overall monthly impact of the proposed 2017-2018 tax and fees is about $7.05 per household. This is based on the average property value of $92,750 and average water and sewer use.