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07 Record VoteAGENDA INFORMATION SHEET SUBJECT: Agenda Item No. 7, record vote on proposal to consider tax increase for calendar year 2001 for the City of Paris. BACKGROUND: The process the City of Paris must follow in approving its budget and adopting a tax levy is subject to the provisions of at least two state statutes as well as the City Charter. As you will note on the agenda for the Special Council Meeting of [DATE], there is an Item No. 7 regarding a record vote on the proposal to consider a tax increase for calendar year 2001. Because the process for adoption of the budget and the tax rate is subject to so many sometimes conflicting statutory provisions, an explanation of this particular item might clear up some confusion regarding this part of the process. Section 26.06 of the Texas Tax Code, entitled Notice, Hearing, and Vote on tax increase, sets out the notice requirements incident to the process for adopting a tax rate which exceeds the effective tax rate by three percent (3%). As part of the process of conducting a public hearing on such a tax increase, the City is obligated to place a notice of the public hearing in a local newspaper conforming with the provisions of the state statute regarding that notice. The statute even stipulates the language which must be included in the notice. The notice must identify the name of the taxing unit, notify the reading public that a public hearing on a proposal to increase the tax revenues by a stated percentage will be held on a certain date and time at a certain meeting place, and contain the language "your individual taxes may increase at a greater or lessor rate, or even decrease, depending upon the change of the taxable value of your property in relation to the change in taxable value of all other property and the tax rate that is adopted." Finally, this same provision of the Texas Tax Code requires that the notice published in the newspaper must contain "the names of all members of the governing body, showing how each voted on the proposal to consider the tax increase, or, if one or more were absent, indicating the absences." As a consequence, in order to meet the requirements of the statute in publishing the notice, the City must therefore conduct a special vote on the preliminary tax rate, based exclusively on the City Manager's original budget, so information as to who voted for or against the preliminary tax rate can be published in the notice of hearing. A mere role call vote will not suffice; the vote must be recorded by a show of hands so the names of the members of the governing body, voting for or against, or shown absent, can be carried in the actual notice itself. DESCRIPTION: Conduct a vote on a proposal to consider a tax increase to the rate required to balance the City Manager's original budget for purpose of including that information in the notice of public hearing. It is acknowledged the tax rate on which the vote is taken is merely a preliminary tax rate, and the vote is taken solely for the purposes of meeting the notice requirements, and is not binding on the City Council members as to their subsequent action on either the final budget or the final tax levy. RECOMMENDED ACTION: Consider and vote on the preliminary tax rate, such vote to be conducted by a show of hands rather than simple voice vote. SCHEDULE: The vote must be conducted at the August 20, 21, or 22, 2001, Council Meeting as one of the procedural prerequisites to going forward with the budgetary and tax levy process. PRESENTED BY: Michael E. Malone, City Manager; Larry W. Schenk, City Attorney; and Gene Anderson, Dir. of Finance COUNCIL DATE: Consider at City Council's August 20, 21, or 22, 2001, Special Meeting. ADDITIONAL INFORMATION: See enclosed form for publication of notice of public hearing, attached schedule for budget process, and recent article from the Texas Town & City magazine on Truth in Taxation. Notice of Public Hearing on Tax Increase The (nameoftaxingunit) will hold a public hearing on a proposal to increase total tax revenues from properties on the tax roll in the preceding year by or even decrease, depending on the change in the taxable value of your property in relation to the change in taxable value of all other properly and the tax rate that is adopted. The public hearing will be held on (dateandtirne) at (meetingplace) FOR the proposal: AGAINST the proposal: (names of all members of governing body and how PRESENT an d not voting: each voted on the proposal to consider the tax increase) ABSENT: The following table compares taxes on an average home in this taxing unit last year to taxes proposed on the average home this year. Again, your individual taxes may be higher or lower, depending on the taxable value of your property. Average residence homestead value General exemptions available (amount available on the average homestead, not including senior citizen's or disabled person's exemptions) Average taxable value Tax rate Tax Last Year This Year $ $ $ $ $ $ /S100 /$100 $ $ (proposed) (percentage) percent compared with last year's taxes, Comparing tax rates without adjusting $100 of taxable value or (percentage) percent cam pared to last year's tax rate. These tax rate figures are not adjusted for changes in the taxable value of property. Criminal Justice Mandate (for counties): The (countyname) County Auditor certifies that (countynarne) County has spent $ (arnoum) in the previous 12 months beginning (dare) , for the maintenance and operations cost of keeping inmates sentenced to the Texas Department of Criminal Justice. (counryname) County Sheriff has provided information on these costs, minus the state revenues received for reimbursement of such costs. Enhanced Indigent Health Care Expenditures (use if applicable): The (narneoftaxingunit) spent $ (amount) from (beginnlngdate) to (endingdote) on enhanced indigent health care at the increased minimum eligibility standards, less the amount of state assistance. For the current tax year, the amount of increase above last year's enhanced indigent health care expenditures is (amou~tofincrease) 52 Trud~-in-Tc~xation 7/20 8/13 8/8 8/20 BUDGET AND TAX RATE PROCEDURES For Fiscal Year 2001/2002 (Modified: August 14, 2001) JULY 25 - LCAD shall prepare and certify to the Director of Finance the approved appraisal roll listing property taxable by the City. [Tax Code, Sec. 26. O1 (a)] AUGUST 1 (or as soon thereafter as practicable) - Director of Finance presents the Certified Tax Roll to the City Council. [Tax Code, Sec. 26. 04(b)] AUGUST 7 (or as soon thereafter as practicable) - Director of Finance publishes "Property Tax Rates" in newspaper. [Tax Code, Sec. 26. 04(e)] NO LATER THAN AUGUST 30 - PRESENT BUDGET City Council Meeting: __a. City Manager presents budget to City Council. This must be done between thirty (30) and ninety (90) days prior to beginning of fiscal year, being October 1 [Charter, Sec. 45], and at least thirty (30) days prior to the adoption of the tax rate, same being no later than September 30. IL. G. C., Sec. 102. O05(a)l b. The budget is filed with the City Clerk. [Charter, Sec. 48] This must be done before the thirtieth (30th) day before the date the City Council makes its tax levy for the fiscal year. [L.G.C., Sec. 102.005] __c. By Resolution, fix the date, time, and place for the public hearing on the City Manager's Budget. Such hearing may be held no sooner than the sixteenth (16th) day after the date the City Manager's Budget is filed with the City Clerk but before the date the Council makes its tax levy. IL. G. C., Sec. 102. O06(b)] IF THERE WILL BE NO INCREASE~ IN THE TAX RATE, PROCEED TO STEP 5 d. IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE - Record vote on proposal to consider tax increase*. [Tax Code, Sec. 26.06(b)(1)] __e. IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE - By Resolution, fix the date, time, and place for the public hearing on the tax increase*. [Tax Code, Sec. 26.06(b)(1)] 8/26 5. NOTICE OF BUDGET HEARING: Publish notice of the Budget Hearing one time in the Paris News (Sunday preferred) at least ten (10) days but not more than thirty (30) days before the date of the public hearing. IL. G. C., Sec. 102. 0065(b)] IF THERE WILL BE NO INCREASE~ IN THE TAX RATE, PROCEED TO STEP 7 6. NOTICE OF TAX RATE HEARING: 9/6 IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: Publish notice of'the Tax Rate Hearing one time in the Paris News at least seven (7) days before the date of'the public hearing. [Tax Code, Sec. 26.06(a)] IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: Publish notice of'the Tax Rate Hearing on the City's website continuously for at least seven (7) days immediately before the public hearing on the increase*. [Tax Code, Sec. 26. 065(b) - Effective January 1, 2001] IMPORTANT NOTE: Notice may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, the headline on the notice must be in 18-point or larger type, and the notice may not be in the part of the paper in which legal notices and classified ads appear. [Tax Code, Sec. 26. 06(b) and (c)] The notice must be in the form shown in Sec. 26.06(b) of the Tax Code. NO EARLIER THAN 16 DAYS AFTER THE BUDGET HAS BEEN FILED WITH THE CITY CLERK - BUDGET HEARING AND TAX RATE HEARING (if applicable) City Council Meeting: __a. Public hearing on the City Manager's proposed budget. b. Earliest date Council can consider ordinance adopting the budget. This must pass by majority of members of whole Council. [Charter, Sec. 53] IF THE PR OPOSED B UDGE TIS ADOPTED A T THIS MEETING AND THERE WILL BE NO INCREASE~ IN THE TAX RATE, PROCEED TO STEP 10 c. SHOULD BE ON THE AGENDA JUST IN CASE IT WILL BE NEEDED: Consideration of and action on proposed amendments to the City Manager's proposed budget. d. SHOULD BE ON THE AGENDA JUST IN CASE IT WILL BE NEEDED: Resolution setting the time and date for a public hearing on proposed amendments. IF THE PROPOSED BUDGET IS AMENDED AT THIS MEETING AND THERE WILL BE NO INCREASE~ IN THE TAX RATE, PROCEED TO STEP 9 e. IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: Public hearing on the proposed tax rate. f. IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: By Resolution, fix the date, time, and place of the meeting at which the Council will vote on the proposed tax rate to increase total tax revenues. [Tax Code, Sec. 26. 06(d)] 8. NOTICE OF VOTE ON TAX INCREASE: IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: Publish notice of the meeting at which the City Council will vote on the tax increase*. The vote may not be earlier than the 3rd or later than the 14th day after the date of the public hearing. [Tax Code, Sec. 26.06(e)] IF THERE WILL BE AN iNCREASE~ IN THE TAX RATE: Publish notice of the meeting at which the City Council will vote on the tax increase* on the City's website continuously for at least seven (7) days immediately before the public meeting. [Tax Code, Sec. 26.065(b) - Effective January 1, 2001] IMPORTANT NOTE: Notice may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, the headline on the notice must be in 18-point or larger type, and the notice may not be in the part of the paper in which legal notices and classified ads appear. [Tax Code, Sec. 26. 06(b) and (c)] The notice must be in the form shown in Sec. 26.06(b) of the Tax Code. IF THE BUDGET IS AMENDED TO ADD ADDITIONAL ITEMS OR INCREASE ANY ITEM OF APPROPRIATiON~: a. 10 DAYS BEFORE THE DATE OF THE PUBLIC HEARING ON AMENDMENTS, BUT NOT LATER THAN SEPTEMBER 16 - Publish notice of the public hearing on the amendments to the City Manager's proposed budget one time in the Paris News at least ten (10) days before the date of the public hearing. [L.G.C., Sec. 102.0065(b)] If items have been added to the budget or if increases in amounts are made, the notice must include the nature of such proposed additions and increases. [Charter, Sec. 51] b. NO LATER THAN SEPTEMBER 27 - HEARING ON AMENDMENTS City Council Meeting: i. Public hearing on the proposed amendments to the City Manager's proposed budget. ii. Ordinance adopting the budget. This must pass by mai ority of members of whole council. [Charter, Sec. 53] iii. STEP 11 MAY BE ADDED HERE IMPORTANT NOTE: THE BUDGET MUST BE FINALLY ADOPTED NOT LATER THAN SEPTEMBER 27. IF NO ACTION IS TAKEN ON OR BEFORE THAT DATE, THE MANAGER'S BUDGET, AS SUBMITTED, AT MIDNIGHT ON SEPTEMBER 27, SHALL BE DEEMED TO HAVE BEEN FINALLY ADOPTED BY THE COUNCIL. [Charter, Section 54]. 10. 11. File the approved budget with the City Clerk IL. G.C. 102. 008] and the County Clerk. [L.G.C., Sec. 102.009] ADOPT TAX RATE - The later of September 30 or the 60th day after the certified appraisal roll is received by the City [Tax Code, Sec. 26. OS(a)], but at least thirty (30) days after the budget is filed with the City Clerk [L.G.C., Sec. 102. O05(a)], and not earli er than the 3 rd or 1 ater than the 14th day after the public hearing on the proposed tax increase*, if applicable, Ordinance fixing tax rate and levying ad valorem taxes. Original to be filed with the City Clerk, and a copy to be filed with the County Clerk of Lamar County and the State Comptroller of Public Accounts at Austin. [Tax Code, Sec. 26. OS(b)] IMPORTANT NOTE: The tax rate cannot be adopted until the budget is passed and must be a separate vote from the vote adopting the budget. [Tax Code, Sec. 26.05(b)] The tax rate cannot be adopted until after thirty (30) days after the budget is filed with City Clerk IL. G.C., Sec. 102. O0$(a)]; however, it must be adopted no later than September 30 of each year due to balanced budget requirement in the Charter. 12. RESOLUTION transferring funds. *Any actions on the tax rate other than the final adoption thereof are required ONLY if the tax rate will exceed the lower of the rollback tax rate of 103% of the effective tax rate calculated as provided by Chapter 26 of the Texas Tax Code. **The requirement for ten (10) days notice before the date of the public hearing on amendments is a conservative number; L.G.C, Sec. 102.0065(a) requires publication of a notice before a public hearing "relating to a budget" and Sec. 102.0065(b) requires that the notice published in accordance with Sec. 102.0065 is in addition to notice required by other law and must be no later than ten (10) days before the date of the hearing. However, Sec. 102.0065(c) says that the entire Section does not apply to the governing body of a municipality required by other law to give notice by publication of a hearing on a budget. This language would infer that the City Charter could apply, and Section 51 of the City of Paris Charter requires only five (5) days notice prior to a hearing on a budget amendment. TNT, It's .D.y. _n. amite! Dght ng the Fuse for Full Disclosure Jim Fort6 and Becky Grimm, Govo'Net Solutlo,u, Dallas There have probably'~1"~'~. ~"~ been very few/J pieces of city- related legislation passed in recent ye~s that have been as volatile = "TNT." Although proper~ v~ues soared in the 1970s, properw t~ rares weren't declining at a corresponding rite, so in 1979 T~ lawm~ers decided to t~e matters inro their own hands by p~sing ~ ~plosive piece of legislation that required broader disclosure of information about properw t~es. ~ming in · e same era ~ the C~ifornia t~- payers' revolr and its resulting Proposition 13, ~d the petition- driven "Tax Payer's Bill of ~ghts" (T~OR), Constitution~ ~end- ment in Colorado, %x~' "%uth in T~ation" (TNT) movement w~ intended to force ~ disclosure of the proper~ t~ process ~d m~e it more acc~sible to ~e cidzen~. The legislation m~dated a series of notices inrended to provide t~payers with a comparison of properW t~ burden from year to year. The legislation attempted to clari~ the relationship be~een consecutive t~ ye~s, ~lowing for only a three percent flat rate adjust- ~:& ~..~_ for inflated ment ~ values, and property x giving the taxing enti- ~'~I ty only the same amount of property tax revenue as was collected in the prior year, with some exceptions. The wording of the required notices, which suggested that numer- ous votes had been taken regarding "tax increases," was confusing and led to inclusion of similarly worded notices by each taxing entity telling taxpayers that the other notice didn't mean anything. Dueling half- page advertisements would appear in newspapers of general circula- tion, one containing the statutory notice, and the other encouraging taxpayers to ignore it and become more informed by attending meet- ings relating to the adoption of the tax rate. The legislation assumed an uninformed citizenry, one that needed to be reminded (in spite of local charter requirements for dis- dosure, public hearings, and open budget work sessions) that they had a duty beyond the election of their public officials. They had to also watch the purse strings dosely, to ensure that iii-gotten wealth not be accumulated. One of the early technical fallacies of this theory 5vas that costs for goods and services inflated at a rate no greater than that of property values, or that inflation would be no more than three percent (the statuto- rily allowed threshold). Even today, many taxing entities will target a tax rate increase of 2.99 percent to avoid even the minimum notice and hear- ing requirements. In addition, the for- mulas assumed that values only go up, and that costs of goods and services only rise relative to property value. Some of the early problems with these stamtorily-mandated equations were the simultaneous plmmmeting prop- erty values and soaring energy costs of the 70s and 80s. The controlling element of TNT is Chapter 26 of the Property Tax Code. An excellent explanation of the requirements and mechanics for TNT can be found on the Internet, on a site maintained by rhe state comptroller's office (www. window. state.tx, us/taxin fo/proptax/mt00/ index, html). Much of what is dis- cussed in the balance oF this article is extractcd from these two source documents with specific focus on those directly affecting cities as the taxing units. According to the comptroller's site, "(t)here are four prindples to truth-in-taxation: · Property owners have the right to kn6w of increases in their proper- ty's appraised vMue and to be notified of the taxes that could result from the new value. · A taxing unit must calculate and publish its effective and rollback tax rates before adopting an actual · A taxing unit must publish tpe- cial notices and hold a public hearing before adopdng a tax rate that exceeds the lower of the roll- back rate or 103 percent of the effective tax rate. · If a taxing unit adopts a rate that exceeds the rollback rate, voters may petition for an election to limit the rate to the rollback rate. Appraised Value and Assessments Appraisal notices aren't new, and to inform a property owner of changes in values makes sense. Prior to the enactment of current law, the appraisal notice was about ali the preliminary information distributed by most taxing entities, and the only indication taxpayers had that their tax bills might change. Unless they watched the local budget process closely or followed it in the local newspaper, the actual tax bills were the only true notice they ever received. In addition to the property value itself, there was also an assessment ratio used by many taxing jurisdic- tions. The ratio reduced the actual appraised value to one against which the tax rate was eventually applied. And the assessment ratio could be changed, depending upon the outcome of the budgetary process. Thus, there could be three variables in the equation for calcu- lating what a tax bill would be, year- to-year. An entity could "hold the tax rate stable" but manipulate the assessment ratio to result in higher property tax revenue. If values went up suf~lciendy, both the rate and the ratio might remain the same, or even go down, bur even those changes did not necessarily ensure that the taxpayers' financial respon- sibility would go down. The passage of TNT contributed to a simplifica- tion of this aspect of property taxa- tion, by prohibiting assessment ratios, placing all values ar "fair market," and requiring additional information on appraisal notices. Property owners also faced another inconsistency in the property tax process: conflict- ing appraisals. Each entity had the right to appraise property for itself. In many cases, there were as many as two, if not three, overlapping taxing jurisdictions; and the property owner might receive three dif- ferent appraisal notices with three different values from the county, the city, and the independent school district. The revisions associated with TNT did away with this potentially confusing practice as well, requiring county- wide, standardized appraisals by one legislatively created entity to be used by all taxing jurisdictions. Additionally, the legislature required an oversight review of values statewide, thereby removing any local bias in the setting of values. Individual entities were allowed to retain their osvn assessment and col- lection functions. However, over time many of these ta,~ation functions have migrated into centralized sys- tems, for economy-of-scale benefit. So the TNT evolution takes us from multiple appraised values, multiple assessment ratios, and multiple tax rates to a~ close to a How have 175+ public agencies saved over $150+ million dollars since 19917 With Creative, Flexible PARS PAI ,S unitary system as possible. The only variable now is the tax rate of each overlapping entity. Theoretically, the taxpayer can make a valid compari- son of the value of each tax dollar paid, compared to the services received, since each entity is now on equal footing. The only issue now is the comparison of the property tax revenues each entity received in the prior year with what it is going to receive in the current year. Again, since we are only dealing from the perspective of cities, we will not delve into the variety of issues facing school districts, the transfer of tax revenues, or the influence of other state-man- dated funding formulas. Nor, since this is a general review, will we dis- cuss the sales tax substitution options available to certain entities. History has shown us that even with these additional disclosure requirements, citizen involvement and influence in the tax rate-setting process have not changed signifi- cantly since the passage of TNT. In 1997, a study published by Dr. Robert Blaud of the University of North Texas Department of Public Administration concluded that: "Based on the findings of this study using data for a 12-year period for 93 Texas cities, real per household property tax burdens were unaffect- ed by the i,,mplementation of truth~ in taxation. Dr. Bland went on point out "that if full disclosure is working as intended, then on the whole citizens in Texas have accept- ed an increased property tax burden in exchange for greater political accountability in the rate adoption It seems clear that while a dti- zen-involvement mechanism is in place, the taxpayer generally is still either uninformed or disinterested in the process of adopting a local tax rate, and only in circumstances of high controversy is there any more citizen involvement in the whole budgetary process than that existing prior to the passage of TNT. The Effective Tax Rate The terms "effective" and "rollback" tax rates were coined to indicate the two ends of a value continuum cre- ated in TNT. Each one has its own equation, and each one means a dif- ferent threshold in the process. According to the comptroller, "(t)he effective tax rate is generally the prior year's taxes [levy] divided by the current year's taxable values of properties that were on the tax roll in both years. The effective tax rate excludes taxes on properties no longer in the taxing unit and also excludes the current taxable value of new properties." [See the simplified version in the table below.] The effective rate also assumes that the taxing entity is immune from the effects of inflation and that con- sumer product inflation and property value inflation are synonymous. The Notification Rate While this term may not be found anywhere in the statutes or regula- tions pertaining to TNT, it has become a political reality, a barrier against which taxing entities "hold their own." As noted earlier, many taxing units decide to set a tax rate that falls just under the property tax rate that requires public notification and public hearings. Presently, that threshold is three percent over the effective rate. In our example, below, any rate over $0.18727 (the $0.1818 on Line 5 times 103 percent) would require additional disclosure as specifically outlined in the statutes, The three-percent margin attempted to address the effect of inflation on costs. However, many taxing jurisdic- tions have interpreted it more as an "allowance" for increased spending. The effort to ensure absolute, full disclosure gained so much momentum that, for the 1998 tax year, the legislature adopted a signif- icant amendment requiring cities to publish notices and hold public hearings if the proposed tax rate generated ANY additional increase in total property tax revenues. This amendment did not aJlow for exclu- sions of new properties or other adjustments in the base year. This 1. Prior Year Tax Levy $1,000,000 2. Prior Year Net Taxable Values $500,000,000 3.Tax Rate per $100 (#1/#2) $0.2000 4. Current Year Taxable Values (an in~rease of 10%) $$50,000,000 5. Effective Tax Rate (#1/#4) $0.1818 Note that the ef~cti',~ tax rate for the current year is lower,due to the increased taxabFe values of the same properties, not any that were removed or added to the t~× rolls. 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. from the prior year (from ,$0.0800 to $0.0909). According to thc comp- troller's ofllce "the legislature wanted to avoid injuring a [city's] ability to pay its debt." Therefore, this expanded calculation was created. The Consummate Act of Full Disclosure- Forms and Notices \Ve alluded to the "half-page" advertisements required by TNT, and feel that a more detailed discus- sion is required to appreciate the lengths to which disdosure is taken. Initially, the legal requirements included the "Notice of Appraised Value" from the chief appraiser and the "Public Notice" (actually a quar- ter-page ad), but with a legislatively mandated 18-point type size for the headline. And there were opposing ads placed by cities that contended Our history is the foundation of our pride. The future is the basis of our excitement. In today's highly energized business environment, you cannot afford to miss that ever important opportunity. Precise teamwork and coordination are an absolute must--and having First Southwest Company as a member of your team is an integral part of that process. Our half-century o fexperience coupled with our broad range of industry expertise provide the necessary' tools for that competitive edge. FIRST SOUTHWEST COMPANY INVESTMENT BANKE£S SINCE 1946 Member SIPC &NASD 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201 1-800-678-3792 .wvvw. firstsw, com Abilene · Austin · Clifton · Dallas · Fort Worth · Houston · LongView Lubbock · McAllen · San Antonio, T_~vas o Fayetteville, Arkansas Los Angeles, Califbrnia . Atlant~ Georgia · Boca Raton .Miami. Orlando, Florida that the required nodces contained erroneous, or at least misleading, lan- guage. There is also a parallel series of public notices and public hearings, such that the TNT requirements occasionally will conflict with local charter requirements for the same sequence of events. For example, the two public hearings cannot hap- pen simultaneously. A city cannot use its charter-mandated budget hearing to substitute for the legisla- tively mandated "tax increase" pub- lic hearing. Two separate acts with essentially the same outcome: opportunities for public input and open discussion of budgetary issues. Local conditions may vary, but using the typical language from a Texas home rule charter, the chart on page 23 shows how the two calendars compare. Now, with additional media and public access opportunities, the law has been expanded to accommodate those means of publication and notice announcements. Cities with public access/cable television and those with Web sites are now required to place the public notice information there as well. In addi- tion to the original public notice and its prescribed language (and headline size), other statements and schedules also must be published, depending upon how deeply into the tax increase process the city gets. For tax year 2000, additional requirements were added to even further "inform" the public. As we researched this article, concurrent with the preparation of our personal federal income taxes, we were con- fused by the similarity of language between that required by the IRS and that of TNT: "Line 6 times Line 4, divided by $100, plus Line 13 of the worksheet..." Now, is that my earned income tax credit or something to do with local proper- ty taxes? One thing, however, is perfectly clear from the legislation: lawmak- ers ensured that the public wouldn't bother them with questions about local taxation policy. They wrote their own escape clause into the law: "Sec. 25.19. Notice of Appraised Value. (b) (6) in italic ~ypeface, the following statement: "The Texas Legislature does not set the amount of your local taxes. Your proper~y tax burden is decided by your locally elected o~cials, and all inquiries con- cerning your taxes should be directed to those officials;" No kidding? So, just as the sophistication of weaponry has evolved, moving from the gunpowder-fired rockets of the ancient Chinese to the flintlock muzzle loader muskets of our pioneer days to the nuclear weapons of the modern age, so has fuli disclosure for property tax matters evolved in Texas. Each time the legislature adjourns, cities are in danger of facing more requirements and more paperwork. And while it is easy to dramatize the sporadic, localized taxpayer "revolts" in certain commu- nities, the expansion of TNT has taken on the concept of using a stick of dynamite to dig a posthole. Yes, we may have accomplished the mis- sion, but we sure have created a lot of work in the meantime. The original intent of full disclo- sure was to enhance citizen involve- TNT:CYCEE Deadline for chief appraiser to certi~ mils to taxing units. Publication of effective and rollback tax rates; statement and schedules; submission to governing body. 72-hour notice for meeting (open meetings notice). Meeting of governing body to discuss tax rate; if proposed tax rate will exceed the rollback rate or 103 percent of the effective tax rate (whichever is lower), take record vote and schedule public hearing (if necessary). "Notice of Public Hearing on Tax Increase" (1 st quarter-page notice) published at least seven days before public hearing 72-hour notice for public hearing on tax increase (open meetings notice). Labor Day Holiday Public hearing on tax increase; schedule and announce meeting to adopt tax rate 3-14 days from this date "Notice of Vote on Tax Rate"(2nd quarter-page notice) published before meeting to adopt tax rate. 72-hour notice for meeting at which governing body will adopt tax rate. CHARTER CYCLE Proposed budget distributed tc city council,filed with city seen tary, and made available for public inspection. Budget review workshop for ci council,staff, and citizen input. Labor Day Holiday 72-hour notice for charter- required public hearing (open meetings notice). Charter-required public hearln~ on budget and meeting to ado tax rate. Meeting is 3 to 14 day after public hearing. Taxing uni must adopt tax rate by Septemb 30, or within 60 days of receivir certified appraisal roll. ment in the property tax-setting process, and it has achieved that to a point. There is obviously more information available and greater opportunity to be informed. However, there is evidence that TNT is not necessarily being used to the fullest advantage, by either taxpayers or taxing entities. If we go back to the four princi- ples outlined by the comptroller's office, there is no question that property owners should be made aware of the changiug assessed value of their property. This is a reflection of real estate market conditions val- idated by the countywide appraisal process and confirmed by the statewide comparison performed. However, it would seem that affected property owners have opportunities to address property tax issues via the mea~as contained within the maiority of home rule charters, those being the public budget work sessions and maudated public hearings. The methodology to analyze year-to-year tax burden, the original intent of TNT, has been modified and revised numerous times as the regulations attempt to accommo- date the various exceptions that have occurred since passage of the original legislation in 1979. It may be that a "clean slate" approach to this issue is appropriate to address the variances that have been identi- fied in a systematic manner, accom- plishing the intent of the legislature while not burdening local govern- ment with excessive efforts to pro- vide the necessary information. Do taxing entities really need to publicize their citizen access points more? With many cities exploring the Web-enablement of their organ- ization and with an increasingly computer-literate citizenry, man- dated newspaper advertisements with specific headline-point sizing may not be the most effective means to communicate for many cities. Plus, the confusing and controver- sial language contained within those notices probably deserves some attention to more appropriately express the intent of that notice. And finally, are £rced percentage thresholds really the most appropri- ate measure of changes in the local property ~x burden? Is there a more realistic means to determine whether the actual tax burden has changed, and relative to what? It is obvious that the need for full disclosure of facts relative to the setting of local property tax rates exists, and that taxing entities are sensitive to the expectations of their taxpayers. However, as TNT has Preserving Community Character The Second Annual Conservat|on Development and Smart Growth Symposium ® Noted keynote speakers Randall Arendt and Ed McMahon ® Work Sessions · Design Exercises · Conservation Development Tours Friday, June 29 8 a.m. to 5 p.m. Circle R Ranch Flower Mound, Tex~s Registration is $100 / $ 35 Student Rate. For more info or to register, contact The innovation Groups at 8007772509 or abake~'~ig.org. evolved over timc, ir would seem that we are at thc point where there are more adjustments being made to the formulas to acknowledge variances than actual information being presented. In our ef~brts to assist the taxpayer, we may have lost sight of the original objective. Maybe it's time for a disarma- ment treaty. * 2001Water printed in the May 2001 s Town and City, two cities were inad- left out. Following is the information for ~ulati0n 73,344 25,453 $11.34 al/m0nth $18.59 lal/m0nth $76.59 $270.09 residential use: 8,000 gallons 24,O96 lse: S15.02 $26.87 Ose: $121.67 $477.17 19~445 71,000 rUse: $16.53 gal/month S24.43 $107.75 $346.46 residential use: lO,O00 gallons 72,O90 $10.38 $85.28