The Round Rock City Council voted 6-0 to approve a $134.6 million budget and a property tax rate of 39.661 cents per $100 of valuation, at its regular meeting Thursday, Sept. 10. Second and final reading is scheduled for Thursday, Sept. 24.

Because of declining sales tax revenues and the economic slowdown, the fiscal 2010 budget reduces expenses by $2.1 million compared to the current budget. There are no new programs and no salary increases in the budget, though critical programs such as street maintenance and economic development will be funded at current levels.

A resident with an average value home in Round Rock would pay $719.76 in City property taxes under the adopted rate, or $43 more than last year. The average home value is $181,480. Note: Individual taxes may increase at a greater or lesser rate, depending on the change in taxable value of an individual’s property.

The City’s budget plan looks to continue the transition from a Dell-dominated, sales tax-driven financial model to one that’s a more traditional mix of revenues. Dell sales revenues have been a significant benefit to the City’s property taxpayers since the company began operations here in 1994. For example, the City’s tax rate was 62 cents in 1992 and more than $45 million collected in years when Dell exceeded revenue projections has been invested in capital projects. Had the City issued $45 million in debt for those projects, our tax rate would be 10 cents higher today.

Dell’s sales tax revenues, however, have been declining the past three years. By aggressively controlling costs and reshaping our revenue model to one that’s more traditional for local government we expect to be able to deliver the services our citizens say they want. Sales tax revenue makes up 57 percent of our current budget; property taxes, on the other hand, make up 20 percent. For most cities, those numbers are reversed. The 2010 budget relies on sales taxes for 50 percent of overall revenue, with property taxes making up 24 percent of revenue. The plan is to continue to gradually decrease reliance on sales tax revenue over the next decade.

The City Council also approved an increase in utility and garbage rates, also on first reading. The utility increase is the last in a series of scheduled rate adjustments to cover costs associated with a regional water project that will deliver water from Lake Travis to Round Rock customers. The 5.8 percent water and wastewater rate increase, along with an increase in garbage rates due to increased landfill fills, will cost the average customer an additional $5.41 a month.

Even with the tax and utility rate increases, Round Rock remains among the most affordable cities in Central Texas. The average residence in Round Rock will pay $150 a month in property tax and utility costs, compared to $214 in San Marcos, $209 in Leander, $205 in Hutto, $200 in Pflugerville, $192 in Austin, $177 in Temple, $174 in Cedar Park, and $142 in Georgetown.

To learn more, watch this video on the 2010 budget proposal.