What you don't see matters in Wylie taxes and budget

I would like to say I had a little something to do with the virtual uproar on Nextdoor over Wylie's tax rate, I cannot. Interestingly, discussion seems to have taken on a life all its own, as one thread has over 250 posts.

Perhaps I have given a little push and plus on discussion inadvertently, as citizens come across my blog posts about our tax rate. It's not like I haven't been blogging about these topics for the past five years, or anything.

That said, let me provide fair warning that people are fairly grumpy about the tax rate. Add to that the increase of property values Collin County Central Appraisal District (CAD) approved yet again this year, and you can bet your sweet bippy that fairly grumpy is tame compared to his brother, downright huffy.

Indeed, many of Wylie's taxpayers are huffy that their taxes have increased dramatically over the past four years. They're organizing a protest as I write.

One statement I read from fellow taxpayer looks a little something like this:
"One thing that confuses me on that post. "they are spending it like drunken sailors". What exactly are they spending it on? I'm sorry but Wylie is not the prettiest city in the area. I don't notice any over the top glamorous buildings. Landscaping has to start to look like a field before it's touched. I don't see an abundance of city vehicles. Most of the schools look outdated (from the outside). Public art and city parks are mediocre at best. Roads are in fair condition but still a lot of improvements and expansion is needed. So I'm, confused on what they are spending it on.

Not arguing that we're not getting screwed, I just can't see where all this money is going if we are being taxed too high. Because it sure doesn't show anywhere."
Totally on point. Can I just say that I love this person? They summed up in 136 words or less, what I've been saying for years. What exactly is the city spending our tax revenue on, especially when growth pays for growth? Any new fire and police and their digs should have been paid for by revenue growth each year. It's not like we haven't had it since Woodbridge Crossing came to town. You know, that little compound on 544 that contains Target and Homegoods.

To address the comment in the quote above on schools, allow me to give credit where credit is due. The schools have nothing to do with city funds and frankly, WISD has done a great job of updating the schools with the latest technology and programs. Though they don't rollback the tax rate, the additional taxes they spend each year have put WISD on the map, and are a large reason why people are moving to Inspiration and other new communities that attend Wylie schools. There are real, tangible results that can be seen in test scores, school ratings and stellar students. Though our ISD tax rate is high, it's not the highest in North Texas, and our district has other extenuating factors related to funding. When we begin discussion on lowering their tax rate, we will have to tread carefully so as not to cut off our nose to spite our face. I suspect their time is coming as well, but for now my focus is on the city.

The city holds the second largest chunk of our consternation, and as was pointed out in the quote above, there just aren't that many tangible things we are getting out of it. OK, so they donated some land to Collin College, but our taxes are going to increase over that entity as well.

So, what exactly does a drunken sailor look like? Though the amount the city gets pales in comparison to WISD, the city gets other revenue, like a portion of sales tax from all those chicken shacks on 544 and 78. In fact, I can only recall one or two times our quarterly sales tax revenue has not increased over the past several years. It's reported in the Wylie News every quarter.

Why are people huffy, you ask? This year turns out to be the perfect storm, and to say I'm not tickled pink about it would be an outright lie. Especially since I have dedicated so much of my personal time to this blog and to politics.

To start, legacy homeowners are getting squeezed with CADs valuation increases year after year, bringing them only somewhat closer to fair market with the near 10% increase this year. To be honest, even if I fought my increase, it doesn't stop it from going up the next several years.  It only delays the inevitable. Meanwhile, sales prices of homes in the area continue to go up thanks to scarcity. There simply aren't enough homes on the market, and the moment a house sells a new CAD benchmark is set.

Also, people may lose their homes as they become priced out. Homeowners of recently built houses, who paid taxes their first year based upon unimproved land, are now getting notices from their mortgage companies, increasing the escrow portion of their payment dramatically to cover the land and improvement (their house). Plus, they are finding out their property value increased nearly 10%, and, as you can imagine, some may not be able to afford the increased monthly payment. Will we see another wave of foreclosures like we did from 2002-2005? Well I suppose that's one way to lower property values and ultimately our taxes, because that's exactly what it did, too.

Still, what about those who don't have a mortgage? Their tax rate increased 9.7% but I'll bet their annual pay increase wasn't that much.

The most important aspect of this tax equation lies with the Wylie tax rate. The names and faces rarely change, only the date does. So here's how I predict the song and dance will go when the budget makes its debut in a few weeks.

The city manager and finance manger will bring a preliminary budget reflecting some horrifying numbers that show revenue cannot possibly gel with liabilities. That's because the budget consists of make-believe numbers.

What they don't go over in detail is the Comprehensive Annual Financial Report (CAFR), which is where the real action takes place. As you can see in the images below, the line item worthy of note every year is "Non current liabilities - due in more than one year". For instance, in 2012 there was $108,995,761. In the current budget there is $103,932,269.

In what I call the second phase of the budget, the horrifying expenses are brought into seemingly respectable numbers and everyone brings out the virtual baseball bat to beat themselves on the back with for the great job they did balancing those fictitious numbers. Meanwhile, in phase three, taxpayers will be handed a few cent reduction, our taxes will still increase overall, and they'll be congratulated for delivering us from a budget crisis. Right about here I'm rolling my eyes. No, seriously.

This 15 minute video explains the concept fairly well. The point of the developing protests in Wylie is that people are on to the scheme. The city is not in jeopardy of running out of money if we push them for a full roll-back to the effective tax rate this year. In fact, they will not run out of money if we also push for a reduction beyond that of our tax rate by a couple pennies. The former is absolutely doable; the latter is a bit inconceivable considering the long and quasi-entertaining budget song and dance history. I imagine there would be a bit of melodrama from the city over giving taxpayers both.

Still, as in previous years, they have excuses readied for taxpayers who complain about the rate. They will nod their heads in agreement, and claim they are paying taxes just like us. They will placate us into thinking they are just as upset. At the end of the day, just as in years past, they will shimmy by like Solid Gold dancers with their canned narrative on growth, road improvements, police and fire headcount, raises and a public safety building overhaul, which is certainly needed but can be handled in other ways.

As a side note, with regard to PD headcount, the city placed an additional four PD in their budget this time last year, though they still hadn't filled a handful of spots with viable candidates. Former Councilman William Whitney picked up that torch, which was quickly extinguished by Mayor Eric Hogue, who publicly pooh poohed him. Yup, it happened just that way last year.

In an ideal world, it would be great to know that our city council members understand the concepts and truly dig into the CAFR, which has proven to be a grey entity floating above their heads for years. In an ideal world, they would vehemently lead the fight on lowering our tax rate and stand with us rather than against us.

Unfortunately, the legacy our mayor, city manager and past and present councils are creating, is that of a city that freely empties our pockets, and I have every confidence this will continue unless taxpayers stand up to them.

Image credit: Global Marine Drilling in St. John, Newfoundland