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Tax Rate 101

August 24, 2005

I don’t know how many times people have questioned me about the tax rate. With all the growth in Cedar Hill, shouldn’t the City Council lower the tax rate? Aren’t we just money-grubbing politicians who want to tax and spend the citizens? Well, actually, no. In fact, I think you would be surprised by how conscientious the Council is with your money.

Your Tax Bill

You may be interested to know that the tax bill you receive represents taxes from several taxing entities — not just the City. These entities include the City of Cedar Hill, the Cedar Hill I.S.D., Dallas County, and special districts like Parkland Hospital. The City portion represents only a small portion of your total tax bill, usually around 15 percent. The rest is paid to the other entities.

The City Council only sets the City’s tax rate. We do not set the tax rate for the Cedar Hill I.S.D., Dallas County, or the hospital district. We have no authority whatsoever over those entities. In other words, we don’t set and can’t change your school taxes or your county taxes.

Realities of Retail

Cedar Hill has been blessed — there’s no doubt about that. All the retail grow helps the bottom line, to be sure. But revenue from retail represents only about 23% of our total revenue. That’s less than one-fourth of the money we need to run the City.

Retail revenue is also relatively unstable. It fluctuates with the economy. When times get tough, consumers buy less “stuff” and the sales tax revenue falls. Because of this, it is not prudent to depend on it as a consistent and stable stream of income.

My point is that all the retail growth going on in Cedar Hill is great and helps us financially, but it is not, and cannot, be a substitute for property tax revenue. We can’t drop our property tax rate hoping that an inherently unstable source of income will make up the difference.

Steady as She Goes…

If you watch or read the news at all, you no doubt have noticed that many cities are raising tax rates. The City of Dallas has just announced that they are raising their tax rate. Lancaster is raising their’s too. Here’s a list of some area cities that are planning a tax rate increase: Dallas, Lancaster, Bedford, Mesquite, Garland, Rockwall, and Frisco (yes, Frisco, and they have had as much or more retail development than has Cedar Hill). And the list goes on. Mansfield is going to lower their rate, but even so, it will still be higher than Cedar Hill’s.

Cedar Hill’s tax rate, by contrast, as remained the same for the last 4 years, and will remain steady this year too. In fact, the tax rate was lowered a bit in 1998 and again in 2001. That’s impressive considering it’s the lowest tax rate in the Best Southwest!

More impressive is that we are able to hire much needed police officers, firefighters, and a code enforcement officer, all without raising the tax rate. Were it not for all the growth, we would either be cutting services and personnel or raising the tax rate — or maybe even both!

What It All Means

The bottom line is that the City Council is trying to be good stewards of your tax dollars. That means we have to balance city needs with the prospect of a changing tax rate.

Make no mistake, the city has some financial challenges ahead. We have an aging water and sewer infrastructure, drainage problems, roads that desperately need fixing, and before long, we are going to need another fire station too. The needs are real.

But we will face these challenges together, at the right time, and in a responsible manner. So, are we money-grubbing politicians? No. We are your City Council — and we are working for you.

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