Graham City Council adopts tax rate increase

A two-cent increase in the property tax rate was adopted by the Graham City Council this week following a public hearing with one speaker.

The public hearing was held Monday, Sept. 9 and served as the third reading of the tax rate considered by the city council. The city’s budget was adopted by the council during the Thursday, Aug. 29 meeting with the tax rate approved Monday of $0.665 per $100 valuation.

During the second reading of the tax rate Thursday, Aug. 1 the council approved lowering the rate one cent from the proposed rate of $0.665 per $100 valuation to $0.655 per $100 valuation, which remains an increase of 3.14% over the current rate of $0.635 per $100 valuation.

City Manager Eric Garretty gave a presentation Monday on the tax rate and stated the estimated total 2024 city tax collection with adjustments would be $3,612,714, with those adjustments accounting for $111,714. This year’s property taxes collected, with delinquent property taxes included, is estimated at $3,248,000.

“Not everyone will pay their property taxes online, so in the budget we account for that by having a non-collection adjustment. Therefore, in the budget, you will see that we estimate just over $3.6 million in property tax revenue for the upcoming fiscal year,” Garretty said. “Property tax revenues, as a part of the general fund budget, which is $8.8 million, ...represent about 41% of all revenues received by the city. The estimated property tax collected for this year will be just short of $3.25 million.”

The estimated increase in the tax revenue is 13% from the previous fiscal year, and the city manager said the primary factors for that are inflation, the need for the city to maintain and improve its infrastructure and retaining employees.

“The property tax rate is a component of the property tax levy, and we’ve mentioned that the property tax levy, that is the monies that we collect from property tax, only supports the general fund,” Garretty said. “Property tax is not used to support other funds, such as the water fund or the sewer fund, which are enterprise funds and they are supported by rates and fees that are set separately by council.”

The average homestead taxable value increased 7.69% from 2023 to 2024, moving from $130,375 to $140,407. Taxes on the average home under the new rate will increase from $827 in 2023 to $919 in 2024.

To calculate tax owed under the adopted rate, multiply the tax rate by the taxable assessed value of your property and divide that number by 100. 

The adopted rate is higher than the no-new-revenue rate of $0.579078 per $100 valuation, but lower than the voter-approval rate of $0.742039. 

The voter approval rate is the highest tax rate the city may adopt without holding an election to seek voter approval of the rate. 

The no-new-revenue rate is the tax rate for the 2024 year that will raise the same amount of property tax revenue for the city from the same properties in both the 2023 and 2024 tax years. The city manager said the seven-cent difference between the adopted rate and the no-new-revenue rate would force the city to cut its budget.

“One cent on the tax rate, on the current freeze adjusted taxable value, equals just a little bit less than $50,000, $48,000 and change. ...So if you take those seven cents (in the difference with the no-new-revenue rate) and multiply it times the $50,000 that yields the sum of $350,000,” Garretty said. “Now I know there’s been some talk about the tax rate and how high it is and some other things. …In order to not raise someone’s taxes in this tax cycle the city would have had to trim $350,000 from its budget. …There’s not a lot of excess in our budget, at least in my opinion and in the council’s opinion.”

Graham resident Johnny Ford spoke at the meeting about how property values have risen in Graham and how his property has increased by 46% in the last five years. 

“In my opinion, the market values are just out of sight, and it throws the burden of taxation back on you (the council),” he said. “So effectively, to make a long story short, I really support your strategic plan, because that’s what we want. We want the services and we realize that the cost of supply has gone up tremendously, but so have our costs.”

In August, the city council approved a strategic plan with nine priorities with tasks to be completed by 2040. Some of those priorities included improving the sustainability of the water and wastewater systems, making residential housing available and affordable and sustaining and expanding public safety capacities.

Before the third reading and adoption of the budget Aug. 29, Graham Mayor Alex Heartfield spoke on prioritizing community needs such as public safety, street repair and improvement and sustaining the water and wastewater infrastructure with the increases.

“The proposed 3% increase in the property tax rate, and the approved 9% increase in water and sewer rates, are not only necessary, but essential to preserving and protecting our community. These financial demands on our citizens are not made lightly, and the council recognizes the pressure these types of increases place on residents who are already struggling simply to make ends meet,” Heartfield said. “That said, the fact remains that if we are to continue to provide the services necessary to grow and sustain our community we must generate the necessary financial resources.”