FULSHEAR, Texas (Covering Katy News) — Fulshear homeowners already know their city property tax rate is going up. What has received less attention is how City Council arrived at the final number — and which spending decisions helped determine what residents will pay.
Council voted 5-2 on Sept. 1 to set the tax rate at $0.190549 per $100 of taxable value, a 13.49% increase from last year's $0.167903 rate. Council Members Camron Miller and Abhijeet Utturkar voted against it.
On a home with a taxable value of $528,000, the city tax would be about $1,006 under the new rate, roughly $120 more than under last year's rate if the taxable value remained the same.
The actual change for individual homeowners will depend on changes in their taxable property value.
The city tax is also only one portion of a homeowner's overall property tax bill. School districts, Fort Bend County, municipal utility districts and other taxing entities levy separate taxes.
But the final tax rate was not simply presented to council as a take-it-or-leave-it number.
A Covering Katy review of the city's Sept. 1 budget discussion shows council members went through proposed projects one by one while city staff calculated how those choices would affect the tax rate.
Council worked through the spending choices
Part of the higher tax rate is tied to debt payments associated with voter-approved parks bonds.
During the meeting, council discussed the debt-service portion of the tax rate and the city's obligation to make payments on bonds that had already been approved by voters and sold. Those costs were distinguished from other proposed expenditures over which council had greater discretion.
Council then worked through a list of individual projects while staff calculated how different spending combinations would affect the tax rate.
The package that emerged included $65,000 for the Redbird Lane easement acquisition, $70,000 for shade structures at Eagle Landing Park, $100,000 for repairs to the City Hall and Police Department building, $200,000 for a potential downtown land purchase, $40,000 for backup generators at lift stations and $30,000 for backup lift pumps.
Downtown purchase exposes a larger disagreement
The proposed $200,000 downtown land purchase produced one of the meeting's most revealing exchanges.
The debate was not simply about whether Fulshear should invest in its downtown. Mayor Don McCoy argued the city needed to move forward and give residents in newer parts of Fulshear more reasons to visit the city's historic center.
“I'm tired of people taking a left, coming out of Cross Creek Ranch,” McCoy said. “They gotta take a right and go downtown. They need a reason to go down there.”
Utturkar responded that he was not willing to increase the tax rate for something that could potentially be paid for through another funding source.
McCoy pushed back against continuing to postpone projects.
“But then we got next year and then next year and then next year,” McCoy said. “I mean, look, took us forever to get a park. I mean, let's start doing something today.”
Utturkar returned to the question of how the project should be financed.
“It is one thing to say that we want it and we have planned for it,” Utturkar said. “It's another thing to say we want it now, now and let's pay it out of pocket when there is an alternate fund that could fund it. I think that is not wise.”
The exchange highlighted the central disagreement: McCoy argued that waiting could mean losing opportunities to strengthen downtown Fulshear, while Utturkar questioned using property-tax-supported city money when an economic development corporation potentially could finance the purchase.
Council also discussed whether the city's economic development corporations could participate. Staff said the possibility arose after the EDC boards had already approved their budgets, leaving insufficient time to obtain a formal answer before the Sept. 1 meeting. Staff indicated the EDCs could potentially be part of similar discussions in the future.
The $200,000 decision had a measurable tax impact
The financial effect of keeping the downtown land purchase in the budget became clear when council asked Finance Director Angela Alvarado what the tax rate would be without it.
Alvarado said removing the land purchase would lower the rate to about 18.69 cents per $100 of taxable value, compared with the roughly 19.05-cent rate council was considering with the purchase included.
For a home with a taxable value of $528,000, the difference is about $19 a year in city property taxes.
The council ultimately kept the $200,000 land purchase in the spending package.
Other projects make the final budget
Council also retained $65,000 for the Redbird Lane easement acquisition and $70,000 for shade structures at Eagle Landing Park.
During the budget discussions, staff explained that the voter-approved parks bond could not be used for the Eagle Landing shade structures because the bond proceeds were designated for Phase 3 of Primrose Park and land acquisition.
The spending package also included $100,000 for repairs to the City Hall and Police Department building and a combined $70,000 for backup generators and lift pumps at city lift stations.
The building repairs were discussed as a way to address problems with existing city infrastructure and safety concerns.
Fulshear’s growth is changing
The tax-rate discussion comes as Fulshear begins adjusting to a significant slowdown in the amount of new taxable property being added to the city's tax base.
New taxable property fell from roughly $375 million a year earlier to about $180.2 million, reducing one of the sources of revenue growth that helped the rapidly developing city expand services while lowering its tax rate in previous years.
Development-related revenues are also slowing.
For years, Fulshear's rapid residential and commercial development allowed the city to collect more property-tax revenue from a growing tax base even as the tax rate declined.
That dynamic is beginning to change.
As the amount of new taxable property moderates, decisions over individual projects, alternative funding sources and property-tax revenue could become increasingly consequential in future city budgets.
For taxpayers, the Sept. 1 discussion offered an unusually detailed look at how those decisions translate into the tax rate they ultimately pay.
The new budget and tax rate take effect with the city's fiscal year beginning Oct. 1.