Page 21 - Southlake FY20 Budget

Transmittal Letter

The City has not increased its tax rate in sixteen consecutive
fiscal years. The $0.41 tax rate is the lowest proposed rate DID YOU KNOW?
since the mid-1980s.
Through the City’s use of cash and
Also, for the coming fiscal year, a 20% homestead exemption aggressive amortization schedules when
is included to complement the current over-65 exemption debt is issued, the City has reduced the
of $75,000, disabled exemption of $75,000, and the over- property tax supported debt per capita
65 tax freeze. The continued use of the exemptions offset from $3,506 in 2010 to $1,197 in 2020.
the tax value on residential properties. The homestead
exemption is set at the State-allowed maximum of 20%.

A 20% homestead exemption will reduce an average-valued home in Southlake by $148,000. The property
owner of an average-valued home will see the equivalent of a tax rate reduction of more than eight cents per
$100 valuation with the exemption applied.

With the homestead exemption in place, and considering the tax rate reduction, the equivalent residential
tax rate on an average-valued home is $0.328.

Taxable value. Figure 6 shows the change in taxable value from FY 2019 and documents the impact of new
construction on the values for FY 2020. Note that the value shown in the table is net of the value assigned
to Tax Increment Reinvestment Zone (TIRZ) #1. For FY 2020, TIRZ taxable value is $557,619,490. The taxable
value also excludes the value related to the City’s homestead and other exemptions.

Taxable Value Comparison Southlake’s property values have
FY 2019 - FY 2020 increased appreciably over time, as
New shown in Figure 7. The difference
Fiscal Value % Increase New Construction between assessed value and
Year Prior Year Construction taxable value is due to exemptions.
as % of Total
2019 $7,286,898,962 9.4% $426,443,267 5.9%
State law requires a taxing unit to
2020 $7,769,729,082 6.6% $353,194,616 4.5% calculate two rates after receiving
its certified appraisal roll – the
Figure 6: This chart compares taxable property values for effective tax rate and the rollback
FY 2019 with those for FY 2020.
tax rate. The effective rate is
the rate that will generate the same amount of property tax dollars as the previous year, excluding new
construction and annexations, when the two years are compared.

The rollback rate is the highest tax rate the taxing unit can set before the taxpayers can start tax rollback
procedures. Depending on the ultimate rate that is chosen by the City and its relationship to the effective
rate, there are requirements that must be followed to comply with truth-in-taxation laws. These requirements
protect the public’s right-to-know concerning tax rate decisions.

As shown in Figure 8, the calculated effective and rollback rates are higher for FY 2020 than the proposed tax
rate. Therefore, the tax rate is not subject to rollback.

20 www.CityofSouthl ake.com