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What You Need to Know When Setting Your Tax Rate. 2011 TASBO Budget Academy January 13-14, 2011. Agenda . Important Dates Calculations Required Notices Failure to Comply Official Action to Adopt the Tax Rate Rollback Rate and Effective Rate Rollback Elections. Important Dates.
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What You Need to Know When Setting Your Tax Rate 2011 TASBO Budget Academy January 13-14, 2011
Agenda • Important Dates • Calculations • Required Notices • Failure to Comply • Official Action to Adopt the Tax Rate • Rollback Rate and Effective Rate • Rollback Elections
Important Dates • January 1 – Date of valuation for properties • January 1, 2011 for the 2011 tax rate • April 30 – Chief Appraiser must certify an estimate of school district’s taxable value • July 25 – Chief Appraiser must certify the approved appraisal roll to the school district • August to September – School districts must publish a Notice of Public Meeting to Discuss Budget and Proposed Tax Rate 10 to 30 days before the public meeting date.
Important Dates (cont.) • August to September – School districts adopt budget and tax rates. (July 1 school districts must adopt budget before July 1 and follow all notice and hearing provisions in June) • September 29 – A school district must adopt its tax rate by this date or 60 days after it receives the appraisal roll, whichever is later. • October – The assessor-collector prepares and mails the tax bills.
Required Notice • Notice of Public Meeting to Discuss Budget and Proposed Tax Rate • Published in local newspaper 10 to 30 days prior to the meeting. • Minimum ¼ page add • Headline 18-point type or larger • Cannot be in the legal or classified section • School district must also post a copy of the proposed budget on its website at the same time. • Nine sections in the report
Required Notice • Notice of Public Meeting to Discuss Budget and Proposed Tax Rate • Data needed: • Region 13 template • http://www5.esc13.net/finance/ • April 30 certified estimate or actual July 25 certified property values from the Chief Appraiser • Comptroller's Truth-In-Taxation Guide for Setting School District Tax Rates
NOTICE (cont) COMPTROLLER'S RECOMMENDED FORM
NOTICE (cont) • Districts may adopt the budget and tax rate after the public hearing, or adopt the budget and wait until later to adopt the rate. • 2nd notice is not necessary • Chapter 41 districts must wait to adopt a tax rate until the Commissioner of Education certifies that the wealth is equalized. • IF you adopt the rate before the budget, you must publish a second notice and hold another public meeting prior to adopting the budget.
Failure to Comply • If a school board fails to comply in good faith with the hearing, notice or rate adoption process, a property owner may seek an injunction to prohibit the school district from collecting taxes (if filed before the district delivers substantially all its bills).
Official Action to Adopt the Rate • Must adopt a rate by official action and set it out in an ordinance or resolution. • Specific statutory wording required IF district adopts a rate above the Effective Tax Rate. • “I move that the property tax rate be increased by the adoption of a tax rate of (specify the rate), which is effectively a (insert percentage by which the proposed rate exceeds the effective tax rate) percent increase in the rate.”
Official Action to Adopt the Rate • In the ordinance or resolution, the district must use larger type, include an example of the maintenance tax increase on a $100,000 home and state that the adopted tax rate will raise more taxes for M&O than the prior year’s tax rate. • Similar language regarding increasing M&O rates must placed on the district’s home page.
Official Action to Adopt the Rate Sample Motion: I move that the property tax rate be increased by the adoption of a tax rate of $1.5400, which is effectively a .33% increase in the tax rate. Sample wording for tax rate adoption ordinance: WHEREAS, THIS TAX RATE WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR’S RATE; and WHEREAS, THIS TAX RATE WILL EFFECTIVELY BE RAISED BY .33% AND WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $3.44;
Rollback Tax Rate • Sum of the maximum M&O rate and the debt service rate. • M&O Portion of the Rollback Rate: Lesser of: $1.50 x .6667 + $.04 + TRE pennies --or-- Effective M&O rate + $.04 --equals-- M&O Rollback Rate
Rollback Tax Rate (cont.) • Debt Service Portion of the Rollback Rate: 2010 debt payments-2009 excess collections --divided by-- 2010 anticipated collection rate --equals 2010 adjusted debt-- Then, 2010 adjusted debt --divided by— by 2010 total values less 2010 captured value in TIF Fund and portion of MV not taxable as a result of Chapter 313 agreement --times-- $100 --equals-- Debt Service Tax Rate
Rollback Tax Rate (cont.) • Debt Service Portion of the Rollback Rate:
Effective Tax Rate Calculation • Evaluates the relationship between taxes for the preceding year and the current year, based on a rate that would produce the same amount of taxes if applied to the same properties taxed in both years. • Required to calculate, but not required to publish the effective tax rate. Calculating the Effective Tax Rate
Rollback Elections • Automatic election to be held if the district adopts a rate above the rollback rate. • Vote to ratify a current year’s tax rate • Tax Ratification Election (TRE) • Hold the election 30 to 90 days after the rate adoption or on general election date if within that time period. • Max. M&O rate with a TRE is $1.17 per $100
Concluding Comments • Check the Comptroller’s website for the Truth-In-Taxation Guide published in May/June each year. • Specific publication for school districts • Attend Truth-In-Taxation seminars hosted by the Comptroller's office • Work with your tax assessor/collector and appraisal district. • Use the templates.
Contact Information: Mark Tarpley, CPA, RTSBA Assistant Superintendent – Finance & Operations Allen Independent School District 612 E. Bethany Drive Allen, Texas 75002 (972) 747-3358 mark_tarpley@allenisd.org Thank you.