Over the past eight or nine years, the city of Bellaire has enjoyed revenue growth because new construction added to the city’s tax rolls, said City Manager Bernie Satterwhite.
But fewer and fewer new buildings have gone up over the past five years, which means the city can’t collect as much tax revenue from new property. Unfortunately, it means Bellaire residents carry more of the tax burden.
“I’m not a doom and gloom guy, but we must manage though this,” Satterwhite said. The trend may affect the city’s budget throughout 2011, he said.
The city saw a peak in 2006 in new construction worth $140 million, said Donna Todd, Bellaire chief financial officer. Since then, values continued declining until 2008, when 130 new buildings added $98 million to the taxable values. The 2009 numbers are even more dismal, with only 50 new structures worth only $76 million — A 22 percent drop.
“This number will continue to decline,” Todd said. “So as this declines, the revenue needs will be born more by the existing taxpayer.”
Because of this, Satterwhite urged caution at the Sept. 21 city council meeting when Councilman Will Hickman suggested the city lower its tax rate even more than staff had proposed. The council-approved rate decreased from 37.75 cents per $100 valuation last year to 37.59 cents this year.
Councilman Jim Avioli spoke against lowering the rate even more, and the council eventually voted against Hickman’s suggestion.
“In these economic times I don’t think it’s prudent to lower the tax rate any more than we had planned to lower it,” Avioli said. He said he understands Bellaire isn’t in the “construction boom” of previous years, but he feels encouraged because homes on the market now still hold high values.
The total taxable values in Bellaire are $3.3 billion, so the $76 million from new construction represents only 2.3 percent of the total, Todd said. The total value is on an upward trend because appraisals on existing homes continue to increase. But from 2008 to 2009, the number only increased one percent.
“The good news is it’s not declining,” Todd said. “We’re holding the values.”
Satterwhite said this is the worst downturn he’s seen in his nine years as city manager. Fortunately, the city always tries to operate on a conservative budget, which helps to deal with this downturn.
“You get used to the good times, and you take that for granted,” he said. “But the not-so-good times are going to come.”
Infrastructure improvements like plans for the new fire station and street and drainage projects will remain on schedule. But the city will hold off on some parks and arts budget items to wait for better times.
“Until we see where those funds are coming from, we feel it’s prudent to put it on the back burner for now,” Satterwhite said. The real estate market looks to be turning back up recently, he said, and he hopes this year may be the bottom of the downturn.
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