KERR COUNTY, Texas – Some leaders said they are not prepared to raise taxes for what costs “might” be around the corner as Kerr County rebuilds from the Hill Country floods.
Commissioners signaled a desire to keep taxes low at its meeting Monday, while also addressing increased needs the county will face as a result of flooding.
The discussion took place after appraisers gave a preliminary estimate that Kerr County lost $200 million in real estate value in the floods.
Last week, the Kerr County Commissioners’ Court unanimously approved Tax Assessor-Collector Bob Reeves to calculate an adjusted “voter-approval tax rate” for the county.
As KSAT reported last Wednesday, the voter-approval tax rate is not the actual tax rate, but the maximum tax rate a government can charge without seeking voter approval.
Kerr County has chosen to adopt tax rates lower than the voter-approval rate the last five budget cycles.
Soon after giving Reeves approval, rumors started spreading that commissioners were seeking to raise property taxes 8%.
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The confusion appears to stem from when Reeves and Kelly discussed the differences between the formulas at last week’s meeting.
The voter-approval tax rate is calculated using a formula from the Texas Property Tax Code and can be calculated using a different formula after a disaster is declared, typically higher than the normal calculation.
The pair simplified the different formulas while discussing them to ‘eight-percent’ and ‘3.5-percent,’ signifying a single number used in the formula.
Some commissioners hope to take ‘wait-and-see’ approach
Multiple commissioners said they did not want to raise taxes to pay for expenses the county could face in the upcoming year as a result of flood recovery efforts.
Commissioner Don Harris cited the county’s strategy during the coronavirus pandemic as a possible blueprint for how the county could avoid a tax increase.
“We didn’t know what was around the corner,” Harris said. “Back then, we tightened belts (and) didn’t have a tax increase.”
Commissioner Tom Jones agreed with Harris, noting cost estimates are not going to be ready by the time the budget must be approved.
“I think we go through this budget process the same way we always would because we don’t know what’s to come yet,” Jones said. “We can prepare the best we want, but until we get done with assessments and everything we have, we don’t have anywhere to go yet.”
Harris suggested multiple methods for which the county could suspend normal expenses to pay for damage recovery, including pumping the breaks on annual road sealcoating projects and denying cost-of-living increases.
“(In 2020,) we told our employees that there was no cost-of-living increase because they were getting checks,” Harris said. “Maybe their neighbors weren’t getting checks, businesses were closed, stuff like that.”
Commissioner Rich Paces agreed with the sentiment but cautioned against reading too much into their comments.
“I agree with your comments about tightening the belt, but we don’t know how tight yet,” Paces said, “There are too many unknowns.”
Why are leaders talking about changing the tax rate now?
Every year, the county must approve a new budget before the end of September to last from Oct. 1 until Sept. 30 of the following year.
Kerr County Judge Rob Kelly said if a new budget is not approved before the deadline, next year’s budget will remain the same as the current one.
Reeves added the tax rate would remain the same or revert to the no-new-revenue tax rate, whichever was lower, if a budget was not approved.
Section 26.042 of the Texas Property Tax Code allows local governments to use a special formula to calculate the voter-approval tax rate if any part of the taxing district is in a disaster area declared by the president or governor.
Kerr County Judge Rob Kelly said last week though federal and state officials promised the county to reimburse flood recovery costs, it will take some time to receive those payments.
Kelly added Monday that although many have donated to fundraisers, such as KSAT’s Together for Texas campaign benefitting the Salvation Army, it does not automatically pay for county expenditures.
“It is controlled by the foundation and their board of directors,” Kelly said. “They have their own committees that determine who to make the grants to.”
While waiting for funds from the government or community foundations, Kelly said it will have to pay contractors assisting in flood relief in the meantime.
In order to calculate the special rate, Reeves needed approval from the Commissioners’ Court, which was awarded last week.
Reeves said he would calculate the normal and special rates and provide both to leaders to use when determining the actual tax rate during the budget process.
While the tax rate is a contentious topic after the disaster, Reeves reminded that those whose homes suffered damage may qualify for property tax exemptions.
For information on how to apply for an exemption, visit the Kerr Central Appraisal District’s website.
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