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change created quite a challenge for cities trying to explain the true financial impact to the typical home- owner. Legislation enacted in 1999 restored the pre-1998 procedures. The Rollback Rate The rollback rate introduces the fact that the tax rate actually has two components, both an operations (O&M) portion and a debt portion (I&S). The city council may set a total tax rate up to eight percent over the effective rate before becoming subject to a rollback petition. Once the tot'd rate exceeds this eight percent, the citizens may file a peti- tion to rollback or reset the rate to that rollback level. It is interesting to note that neither the effective rate of three percent nor the rollback rate of eight percent have changed since the original legislation was passed in 1979. One of the problems with broad- based, prescriptive legislation is that it occasionally does not recognize all the ramifications of its directives. Many of us recall with fondness the "Tax Reform Act of 1986" and the subsequent "Technical Corrections" legislation that followed. Such was also the case with TNT. One of the early adjustments to the tax rate cal- culations involved the treatment of taxpayer-authorized general obliga- tion debt. The logic behind separating the rollback rate into two components is that most bonded indebtedness either already requires voter approval or has been subjected to its own public review process (in the case of certificates of obligation). Therefore, the debt service component of the rate should not be subject to rollback, since it has alread7 been subjected m public scrutiny and disclosure. Additionally, to allow such a weapon in the arsenal of tax activists would seriously jeopardize the credit quali- ty of the issuen However, the debt service rate must be set EXACTLY at the level necessary to generate the revenues required to pay off' the "previously approved" and issued debt. So tech- nically, the portion that becomes subject to rollback is the operations component only. (See example below) Note that the debt service rate is based on CURRENT values, not PRIOR values, as was the case with the effective rate. In this example, any rate less than $0.20872 would not be subject to rollback, although the debt service component alone increased by more than 13 percent Year Tax Levy ExpandedVersion $1,000,000 a. Amount for 0&M $600,000 b. Am0unt for I&S $400,000 2. Prior Year Net Taxable Values 5500,000,000 3.Tax Rate per $100 (#1/#2) $0.2000 a. Portion for O&M $0.1200 b. Portion for I&S $0.0800 4. Current Year Taxable Values (an increase of 10%) $550,000,000 5. EffectiveTax Rate (#1I~) $0.18180 a. Effective Rate for O&M (#1 b/#4) $0.10909 6. Rollback Rate a. New debt service $500,000 b. Rate for I&S (#6a/#4) $0.09090 c. Rolrback rate for O&M (#Sa '108%) $0.11782 d. Total rollback rate (#6b+#6c) $0.20872 You can't judge a book by its cover If you know BOCA, Standard or Uniform Codes, you already know a lot about the 2000 International Codes. Many provisions of the International Codes are the same provisions and referenced standards that you are already familiar with. BOCA International offers code adoption support so you can make the transition to the International Codes with confidence. For a FREE Adoption Toolldt, call BOCA International at 1-800-214-4321, ext. 808.