After more than an hour of discussion and debate, as well as three failed votes, The Woodlands Township board on Thursday night failed to set the 2020 property tax rate for the township after the six directors present could not agree on what the rate should be.
Montgomery County Tax Assessor/Collector Tammy J. McRae, who was at the meeting to answer possible questions about the tax rate, made it clear how unusual the situation was.
“I’ve been in this business 34 years,” McRae said. “This is my first time experiencing something quite like this.”
The township 2020 budget was approved during the meeting Thursday in a 5-1 vote, with township board Chairman Gordy Bunch absent and Director John McMullan voting no on the budget. However, after the $130 million 2020 budget was approved, the six directors present were unable to come to the necessary consensus to approve any of the three proposed 2020 property tax rates that were put forth.
At the end of the meeting, the board voted to schedule another special meeting to set the property tax rate for 2020. The meeting will be at 6 p.m., Wednesday. Township General Manager and President Don Norrell told the board that he expected Bunch to be available for the meeting, meaning all seven board members would be present.
One of the problems facing the board by not passing the property tax rate, McRae said, is that it will possibly affect the county’s bill mailing schedule. She told the six members present that ideally, the tax rate would be set no later than Sept. 18 so she and her staff could prepare the bills, print them and mail to all county residents by Oct. 1. If The Woodlands does not set a tax rate by Sept. 18, she added, the township would be required to foot the bill for the printing and mailing of separate property tax bills to township residents only.
Another problem is state law, McRae explained, which requires property tax rates to be set no later than Sept. 30. If the township board cannot pass a property tax rate by Sept. 30, the rate is automatically set by state law at whatever the county effective rate is, which for Montgomery is 22.4 cents per $100 valuation of a home.
The township board meets each year for four days and conducts budget workshops to plan and set the 2020 budget as well as make a preliminary decision on the property tax rate, which for 2020 was set in mid-August at 23 cents per $100 valuation of a home. After those planning meetings, the board is required — if raising the property tax rate — to conduct two public hearings. Because the 2019 property tax rate was 22.73 cents per $100 of valuation, the 2020 proposed rate of 23 cents was an increase and two public hearings were hosted on Aug. 28 and Sept. 4.
During the budget planning meetings, the proposed tax rate was preliminarily approved in a 6-1 vote with Director John McMullan voting no on the increase. However, during the first public hearing on the budget and tax rate on Sept. 4, Director Ann Snyder said after much thought and consideration, she no longer supported the 23 cents rate as she had in mid-August.
McRae told the board on Thursday that in order to approve the 23 cents rate, an increase, that five of the six members needed to vote yes. For other rates, including keeping the 2019 rate of 22.73 cents as well as the Montgomery County effective tax rate of 22.4 cents per $100 of valuation, McRae said only four votes were needed to approve them.
On Sept. 12, the first motion was made by Director Carol Stromatt, who proposed a rate the same as the county’s effective tax rate, 22.4 cents. That motion was seconded and then debated for several minutes before failing in a 3-3 tie vote with Stromatt, McMullan and Snyder voting yes for that rate, but directors Bruce Rieser, John Anthony Brown and Brian Boniface voting no.
Brown and Rieser both said they felt that setting the rate at 23 cents per $100 valuation was optimal due to questions about township revenue in 2020. The Woodlands is expected to lose an estimated $1 million in sales tax revenue in 2019 compared to 2018, and with concerns over the future of Anadarko, which was recently purchased by oil industry giant Oxy, township officials fear the hundreds of Anadarko employees currently working in The Woodlands may leave if Oxy relocates staff — a situation that would result in more sales tax losses, officials reported.
Other budgetary challenges include more than $2.6 million in new expenses the township will need to fund for streetscape maintenance services in 2020 as well as an increase in trash, solid waste and recycling rates under a still-being negotiated contract with Waste Management. And, there are an estimated $5 million in extra expenses in the coming years for The Woodlands Fire Department that would fund upgrades to fire stations 3, 4 and 5, to construct an emergency training center and also create a second company with 15 new firefighters.
Snyder said she would be in favor of the effective rate, however Rieser contested her view.
“I disagree,” he said to Snyder. “If we lose sales tax revenue from Anadarko (in 2020), we will be in trouble.”
After that motion, Brown made a motion for a 22.73 cent rate. However, after lengthy discussion on that proposal, it also failed with a 3-3 vote. McMullan, Snyder and Boniface voted no on the 22.73 proposal while Brown, Snyder and Rieser voted yes.
The third and final proposal of the meeting was made by Boniface, who proposed the original 23 cents rate that had been set in August budget meetings. That rate needed five yes votes, but failed with only two directors — Boniface and Rieser — voting yes while the remaining four directors cast no votes.
McMullan was frustrated by the dilemma, but said the board will move forward on Sept. 18 and attempt to pass a property tax rate then.
“We are in uncharted territory. We need five votes for a tax increase, we need four votes for the effective rate, and we don’t have that,” McMullan said. “So, we’re stuck. I think the path forward is to schedule another meeting.”