08.26.13 MINUTES - Laserfiche WebLink

Home Browse Search

Regular Council Meeting August 26, 2013 Page 4 14. Discuss and act on a Resolution calling a public hearing on proposed amendments to the proposed budget for fiscal year 2013 -2014. A Motion to table this item was made by Council Member Lancaster and seconded by Council Member Drake. Motion carried, 7 ayes — 0 nays. 15. Discuss quarter cent sale and use tax approved in 1993 for reduction of property tax rate. Mayor Hashmi said proposition number 2 of the special election of May 1, 1993, read "The adoption of an additional sales and use tax within the City of Paris, Texas at the rate of one - fourth of one percent to be used to reduce the property tax rate." Mayor Hashmi displayed information regarding the property tax rates beginning in 1992 and cited that in year 2000 -2001 the tax rate was 0.61 with .09262 for debt and .51738 for operation and maintenance expense. Mayor Hashmi said the tax rate for 2002 -2003 was 0.695, which was the highest it has been and that it continued on up through 2006, at which time the rate dropped to 0.59225. Mayor Hashmi read from the State Comptroller's Truth -In- Taxation Guide, the following "Once a taxing unit has collected the additional sale tax for a year, its property tax revenues will reflect any rate reduction arising from the additional sales tax. As a result, calculating the effective tax rate will not require an adjustment for the additional sales tax." Mayor Hashmi asked Mr. Anderson to explain this statement. Mr. Anderson explained when the voters approved the levy of a quarter cent sales tax for property tax reduction; the law required the City to adjust the property tax rate in whatever amount it took to lower the property tax revenue in an amount equal to the sales tax revenue. He further explained that what the City did was substitute sales tax for property tax and that was a one -time adjustment. Mr. Anderson said the City dropped the rate about 07.2 when it was instituted and Mr. Anderson further explained the Truth -In- Taxation meant that once the adjustment was made, the City did not have to make future adjustments. Mayor Hashmi noted that he had reviewed minutes from that time period where budget discussions took place and there was discussion about tax reduction but he did not find where this item was discussed during those sessions. Mayor Hashmi said in the last two years the City Council has reduced the taxes and had done so without cutting services or staff. He said that ideally taxes should be cut based on collection however, the sales tax revenue was not predictable revenue and it could be up or down. He said if Council was to reduce taxes based on one year and then had a bad year the following year, Council would have to raise the taxes. Mayor Hashmi said they were required to maintain five months of reserves and would be left with very little working capital, if all of it was used to reduce the property taxes. He said if the City ever gets in a financial crunch, they would have to increase the taxes and the amount of reduction would be miniscule to the individual taxpayers. Mayor Hashmi said if the citizens of the community still want to entertain this possibility, he feels that the Council would not have any objection to a discussion. Council Member Frierson said it was important to know what was going on during the prior years when City Councils were making decisions over the last decade 16. Discuss and act on policy making authority for the City of Paris. Council Member Wright said the need for clarification of this issue came with the appointment of a committee to review the City's policy manual and make recommendations if