Council members for the City of Magnolia unanimously agreed on an ordinance which lowers the city’s tax rate at a special meeting held Aug. 31.

Last fiscal year the tax rate was .4914 cents per $100 valuation. After its special meeting council members passed an ordinance which makes the current fiscal year’s tax rate .4814 cents per $100 valuation.

The decision came after several budget meetings including a joint meeting with the 4B Community Development Corporation.

The 4B Corporation agreed to assume the debt for the utility relocation project on FM 1774 in a two-year contract. The utility relocation project was done through a $2 million loan, so that the Texas Department of Transportation (TxDOT) could begin its $10 million widening project.

The city applied for a $2 million loan to move the utilities along FM 1774 from about Friendship Drive to 10th Street. The 4B Corporation will be making a $102,038.52 payment to the TxDOT Special Infrastructure Fund.

The 4B Corporation was hesitant to accept the debt of the loan because it has about 10 projects it is currently working on and had already held its budget meetings. The corporation will have to re-evaluate its budget and possibly postpone projects.

Council members previously stated that if 4B did not accept the debt for the loan it could be forced to raise the tax rate for its citizens to about 66 cents per $100 valuation.

Mayor Todd Kana said the decision to lower the tax rate was also a “good gesture to the people” because of the current economic hardship. The city determined that it would have the ability to bring the tax rate down during its budget meetings.

Kana said council members could have kept the tax rate the same, but they wanted to help the residents of Magnolia.

“We thought we would give back,” he said.

He added that he hopes in coming years the city will be able to scale back more on the tax rate.

In addition to the tax rate going down, the average taxable value of a residential homestead went down. Last fiscal year the average value was $106,340. The average taxable value of a residential homestead in the city limits this year is $103,518.

While the tax rate may have gone down, overall tax revenue for the City of Magnolia will increase, according to Kana.

According to Montgomery County documents, in the 2010-11 fiscal year the tax base for Magnolia was $100,349,603. For the upcoming fiscal year, the tax base will be $105,486,963.

This fiscal year’s budget will raise 3.1 percent or $22,591.51 more than last year’s property taxes.

Of that amount, 4.6 percent or $7,892.28 is tax revenue to be raised from new property added to the tax roll this year.

Council members also passed the council’s fiscal year budget along with the 4A Economic Development Corporation and the 4B Community Development Corporation budgets at its special meeting.

Before classifying the FM 1774 loan debt of the utility relocation project as an official 4B project, the 4B Corporation will have to follow public hearing guidelines. Frank Parker, 4B President, said it will take about 60 to 90 days to make the debt an official project of 4B.

Kana said there will be time before a payment is due.

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