Tax to the max

Cronk’s proposed budget would raise taxes by the maximum allowed under state law: 3.5%. Now, as some in media have pointed out, the state is allowing municipalities to go up to the old 8% limit (that was in place prior to 2019) due to the Winter Storm Uri disaster declaration. But the city would not be allowed to use any revenue generated above the 3.5% limit to calculate its taxes the following year.

For instance, imagine that the city collected $100 worth of taxes last year. If it increased taxes by 3.5%, it would collect $103.50 this year. Then in 2022 it could increase taxes by 3.5% again, collecting $107.12.

If the city instead decided to increase taxes by 8% this year, it would collect $108. But next year, it wouldn’t be able to increase taxes by 3.5% over $108, it would be limited to increasing them by 3.5% over $103.50, which would yield $107.12 of revenue in 2022.

So if Council chooses to go above the 3.5% limit this year, it should only do so to pay for onetime expenses.

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