Page 23 - Hurst Budget FY21

(e.g., disabled veteran, senior citizen and homestead exemptions) offered to property owners will
provide over $8.2 million in property tax relief for the 2019-2020 budget.

The average city tax bill for a homeowner in Hurst is $1052 annually or about $88 per month. This
amount is for city services only and does not include the property taxes owed for school district, county,
hospital district, or college district services. Overall, the city’s bonded indebtedness, paid primarily
through the tax rate, has increased over the past several years to fund infrastructure improvements
and new facilities. The property tax rate was lowered several times since 1992 and increases were
only approved in accordance with financial plans and funding needs. Rates levied by most neighboring
cities in Tarrant County remained flat or increased each year during this same time period. The city’s
willingness to lower the tax rate in strong economic times saved taxpayers over $25 million since 1992.
In addition to tax rate relief provided during this time, the city grants the highest homestead exemption
allowed by state law and provides additional senior and disabled citizen exemptions. The City Council
passed the senior and disabled tax cap, which freezes Hurst taxes at the level paid when property
owners become disabled or reach 65 years of age. This cap remains in effect for all future budget
years, assuming this section of the state constitution is not amended. Senior and disabled property
owners in Hurst will receive nearly $1.4 million in tax relief for the 2020-2021 fiscal year.

Sales Tax Revenues

The second major financial consideration that guides the development of the budget for the upcoming
year is the projection of sales tax revenues. The city collects a total of 2% sales tax: 1% for General
Fund; 1/2% for the Community Services Half-Cent Sales Tax Fund; and 1/2% for the Anti-Crime Fund.
It is a city policy to use a conservative approach in forecasting this revenue. City sales tax collections
reached their highest point in 2016. Sales tax receipts have been as high as $10.82 million for the
General Fund. To spur economic development, a portion of total sales tax collections are shared with
local businesses, including Simon Property Group who owns North East Mall. For fiscal year, 2020-
2021, total sales tax revenues are projected to be down approximately -10.68% from the previous
year’s General Fund budget and includes a reserve for sales tax contingency of approximately $1
million. The economic contingency is designed to help mitigate the impact of unforeseen economic
conditions. The economic downturn due to the COVID-19 pandemic is just one example of why the
reserve is important and remains in the budget. The reserve in the FY 2019-2020 budget helped
mitigate the economic impact of the pandemic and is carried forward in the FY 2020-2021 budget. The
Half-Cent Community Development Corporation participates in the revenue sharing agreement with
Simon while the Anti-Crime Fund does not participate. All projections of sales tax revenues are very
conservative due to the volatility of this revenue source. Economic uncertainty and heavy reliance upon
retail sales contributes to sales tax volatility which is further compounded by state-mandated sales tax
holidays each year. These “holidays” have had an expected negative effect on retail sales tax revenue,
but this impact cannot be directly measured. Staff is cautious in planning for this revenue. Due to the
sales tax sharing agreements that are in place, the city builds into the budget only revenues that will
remain after the revenue is shared with business owners that entered into agreements with the city.
The Shops at North East Mall agreement with Simon started January 2002 and the North East Mall
agreement began in April 2003. The city reached an early payoff of the Shops portion of the agreement
in fiscal year 2008-2009. While the North East Mall agreement is scheduled to end in 2023 the city is
not planning for that specific increase in sales tax revenue and we anticipate the need to reinvest in
the mall to ensure is continued success.

The city has been proactive in informing the state and federal congressional delegations of the need
to allow local control over tax policy and the need for an Internet sales tax. An important issue is that
local sales tax revenues could be adversely affected in future years should Texas not remain origin-
based in collection of sales taxes for “brick-and-mortar” sales. In Texas, taxes have historically been
collected at the point-of-sale regardless of where goods are delivered (for most non-Internet based

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