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Manager urges adopting current tax rate and reserving incremental capacity amid state-level uncertainty
Summary
Staff recommended Richardson adopt its current tax rate for FY27 and reserve the available tax increment (~$2.2M) for future needs, noting some council members were concerned about legislative risk to that capacity.
During the budget workshop, staff briefed council on tax-rate options and the city's available incremental capacity under Texas statute. The manager recommended adopting the current tax rate while reserving the increment rather than exercising it immediately.
Magner explained the mechanics of the no-new-revenue rate, voter-approval rate and the incremental amount available from prior years. He said the city currently has roughly $726,000 of unused increment from last year and could capture up to about $2.2 million if it elected to use all available increment in FY27, but recommended reserving the increment and deploying funds strategically in later years to cover priorities such as additional firefighters.
Council members asked about legislative risk around SB2-style caps and whether the state could change the increment calculation; staff acknowledged some risk but said they had not seen proposals to eliminate the increment outright. Several members urged caution about leaving large sums "on the table" if the Legislature tightens rules in the next session; others favored the manager's conservative approach of reserving capacity while continuing discussions.
