Chesterfield tax rate stays flat

The Chesterfield City Council on Sept. 19 approved by a vote of 7-0 a property tax rate of 3 cents for every $100 of assessed valuation. This works out to about $17 a year for a Chesterfield homeowner with a $300,000 home, which is less than one-half of 1 percent of the taxpayer’s total property tax bill. This is the same property tax rate Chesterfield residents have been paying since 2008. And, according to City Administrator Mike Herring, it should remain the same through 2015.

The city has consistently lowered its property tax rate since voters approved a maximum of 13 cents per $100 of assessed valuation in 1995 to repay debt service for the city’s parks general obligation bond issue. By 2016, the city expects to be able to drop the property tax altogether.

Councilmember Matt Segal (Ward 1) said the city has been able to keep its property tax rate low by using its property tax reserve fund to cover any shortfalls in the total debt service the city must pay each year.

Segal said the city consistently decreased its property tax rates as assessed valuations within the city increased. When the economic downturn hit in 2008 and the city’s assessed valuations began to drop, the city made internal cuts.

“In 2008, 2009, we began to see a drop in the economy. We saw the effects of that in 2010,”  Mayor Bruce Geiger said. “We had a reduction in force of almost 10 percent and we took a million and a half dollars of expenses out of just our general fund. It was across the board. It involved all departments.

“As a result of that, we reigned in other spending as well, then began to see a pickup in the economy. The sales tax receipts began to move upward in 2010-2011.

“We’ve been very consciously building a surplus in our general fund accounts over the last two years.”

Geiger said that the city decided to use that budget surplus to pay down debt, which is why it has been able to forego raising property taxes.

Segal pointed out another reason for using the reserve funds to pay off the debt.

“The goal is that (the property tax fund reserve) has to be zero before the debt expires in 2015 or you have to give refunds to the constituency – which would be a nightmare to do,” Segal said. “We wanted to make sure we came up with a zero balance in the year 2015.”

Segal called the city’s use of its property tax reserve fund for debt service repayment “forward thinking.”

“We’re putting our fund reserves and surplus to work,” Segal said. “The surplus this year is going toward retirement of debt. Next year, we are committed to keeping our very small property tax rate down to 3 cents. By 2015, our ultimate goal is to reduce it as low as we can to retire the funds. And by 2016, it goes away.”