City staff recommend using voter-approval property-tax rate as preliminary budget guidance

A finance staff member recommended at the City of Odessa council budget retreat that the city use the voter-approval property-tax rate as the preliminary rate for the coming fiscal year, saying that approach captures allowed recapture and aligns with the administration’s priority-based budget guidance.

City finance staff described two statutory rate options available to a city of Odessa’s size: a “known revenue rate” that holds taxpayers’ bills constant for properties on the roll in both years, and a voter-approval rate that allows the city to increase the rate up to the statutory limit without a new election. The presenter said management is recommending the voter-approval rate for the proposed budget, and that appraisal districts have supplied preliminary values to inform that decision. “We are recommending... to go with the voter approval rate,” the staff member said.

Why this matters: the choice of rate determines how much new property-tax revenue the city can lawfully collect without seeking voter approval and affects the general fund and debt-service calculations that feed the proposed operating budget. Staff noted the city obtains new property-tax revenue only from newly added property on the tax roll; the rest of the change in values is accommodated by adjusting the rate if the known-revenue approach is used.

Staff presented preliminary combined taxable values for Ector County and Midland County at about $12,780,000 (preliminary) and said there is a recapture opportunity the city may capture on a rolling three-year basis; staff estimated roughly $1.2 million in missed property-tax revenue from prior years that the city is allowed to recapture but did not give a final certified amount. The presenter emphasized the appraisal districts provide preliminary values in April and final certified values later in the process.

Council members asked technical questions about how tax-rate math translates to a homeowner’s bill and about the effect of debt service on net tax revenue. Staff said net tax revenues shown in the materials already account for debt-service allocations and that final decisions will use certified appraisal rolls when they are provided.

The presentation framed the recommendation as guidance for the council rather than a final action; staff repeatedly described the figures as preliminary and said the council could choose a different rate. Staff also said they will work with communications staff to explain the numbers to the public ahead of formal rate-setting.