by KIM HILSENBECK
Kyle City Council members are considering a property tax increase and a road bond election as they begin preliminary discussions about the city’s priorities and budget for the next fiscal year.
At a recent planning workshop, council members and city departments also discussed whether to follow through with a planned 20 percent increase in water and wastewater utility rates. Council members Becky Selbera and Diane Hervol expressed reluctance about continuing with the rate hikes, in part due to complaints from their constituents.
But Mayor Pro Tem David Wilson said the city continues to lose money on water utilities.
“We need to focus on reality,” he said.
Last September, the council voted to raise water utility rates over three years, with 30 percent up front, then 20 percent in each of the next two. But Mayor Lucy Johnson said the city’s budget is considered on an annual basis, so the council has not officially voted on the next round of utility increases.
Prior to last year, Kyle had not raised its water utility rates in a decade. According to spokesman Jerry Hendrix, the city had relied on funds from the impact fees it took in from developers to keep residential water rates down. In addition, city leaders transferred money from the utility fund into the general fund to maintain lower property taxes.
“Kyle lowered its property taxes every year for 10 years because of the transfer,” City Manager Lanny Lambert said.
The utility fund stayed high with the steady influx of new development. Over the next eight years, Kyle grew exponentially to around 30,000 people.
But Hendrix said when the economy screeched to a halt, development did, too. The impact fees stopped flowing. The city also completed a $2.8 million expansion on its wastewater treatment plant in 2006.
A 2011 analysis of the financial picture for the city revealed the utility fund was running out of money.
Hendrix said that residential water utility rates only cover about 80 percent of services provided, though commercial rates cover 120 percent. The rates don’t balance each other out anymore, he said, because of decreased impact fees and the wastewater plant upgrade. Hendrix said the city’s overall debt now stands at $70 million.
At the same time, the council has begun talking about the possibility of a property tax increase.
Hervol suggested gathering public input on the water and tax increases. She also wants public feedback on proposed transportation improvement projects, specifically Goforth, Bunton, Burleson and Lehman roads. Hervol said she has also received complaints from residents about the amount of debt the city owes.
Wilson proposed asking for public feedback on the city’s priorities, then providing estimates on how much each investment would raise taxes.
Johnson said a public input forum is targeted for February.
Transportation work and other issues will probably come up for a bond election and will likely necessitate higher property taxes, according to Lambert. Hendrix said it seems unrealistic to hold a bond election this spring, but the city may be ready for the November election.
