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TAX RATE ELECTION (TRE)

TAX RATE ELECTION (TRE). Legal & Local Considerations. LEGAL CONSIDERATIONS. If a board adopts a tax rate above its rollback tax rate, it must hold an election 30-90 days after adoption of the tax rate.

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TAX RATE ELECTION (TRE)

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  1. TAX RATE ELECTION (TRE) Legal & Local Considerations

  2. LEGAL CONSIDERATIONS • If a board adopts a tax rate above its rollback tax rate, it must hold an election 30-90 days after adoption of the tax rate. • In order to use the November 4 uniform election date, a school board must order the rollback election by August 26, 2008, which is 70 days before the election date (Tex. Elec. Code 3.005c).

  3. LEGAL CONSIDERATIONS • Rollback elections are not required to be held jointly with other political subdivisions. However, if a district chooses to hold a rollback election with a trustee election, the rollback election will be covered by the same joint election requirements as the trustee election. If the rollback election is held on the general election date, school districts must use the same election-day polling places as counties within the districts’ boundaries (Tex. Elec. Code 43.004b).

  4. LEGAL CONSIDERATIONS • School districts are required to use handicap-accessible voting systems in rollback elections. Contact your county about the availability of voting machines. Smaller counties and political subdivisions may be exempted in some cases from the requirement to provide accessible voting systems at each polling place. For more information, contact the Sec. of State’s Office.

  5. LEGAL CONSIDERATIONS • Rollback elections may require preclearance by the Department of Justice. Districts using the November uniform election date should consider coordinating preclearance submissions with the county. • A sample rollback election ballot can be found in Appendix 6 of the Comptroller’s Truth-in-Taxation Guide.

  6. LEGAL CONSIDERATIONS • If a majority of the votes cast in the election favor the proposition, the tax rate for the current year is the rate adopted by the board. If the proposition is not approved, then the board may NOT adopt a tax rate for the current year that exceeds the rollback rate (Tex. Tax Code 26.08).

  7. LEGAL CONSIDERATIONS • Public funds cannot be used for political advertising or electioneering to support a rollback election. School districts are permitted to communicate with taxpayers by producing explanatory materials about what is at stake in a rollback elections as well as information about the conduct of the election (date, polling sites, etc.) as long as there is no advocacy in the materials.

  8. LEGAL CONSIDERATIONS “TENTATIVE” 2009 Planning Calendar • July 25: Deadline for receipt of certified local value from CAD. Must possess before adopting a tax rate that is above the rollback limit. • Meeting to decide on the public meeting date on budget and proposed tax rate that is voted on by the board.

  9. LEGAL CONSIDERATIONS “TENTATIVE” 2009 Planning Calendar • Notice published 10-30 days before the public meeting • Public meeting on budget and proposed tax rate followed by a meeting(s) to adopt the budget and tax rate (may all be done in one meeting)

  10. LEGAL CONSIDERATIONS “TENTATIVE” 2009 Planning Calendar • August 1: 62 days before October 3 (Elections must be ordered before this day to have elections on a date other than November 3) • August 25: Last day to order general election (election ordered on this day will be held on November 3)

  11. LEGAL CONSIDERATIONS “TENTATIVE” 2009 Planning Calendar • October 3: 30 days before the General Election Day (Black out period) • November 3: General Election Day • December 3: 30 days after general election day (Black out period after general election) If district is unable to hold election on general election day, the election date will be after December 3 • After Election, mail current year tax bills.

  12. LEGAL CONSIDERATIONS SUMMARY • Reference the 2009 TNT Guide • Consult the school district’s attorney - Verify all timelines and deadlines - For the rollback election order • Start Planning Early • Remember a chapter 313 agreement precludes a TRE 2 years after execution

  13. LOCAL CONSIDERATIONS Analyze Your Data (& your neighbors’) • Target Revenue • WADA Trends • Financial Conditions - Operational Costs (Payroll, Fixed, etc.) - Fund Balance • Chapter 41 Status & Recapture

  14. LOCAL CONSIDERATIONS Preliminary Details • Realize that it is difficult for boards and taxpayers to believe and accept the long-term financial effects of HB 1 • Too much fund balance (a public perception) hurts the cause for a TRE • Be able to verbalize budget reductions and other implemented efficiencies prior to the need for an increased tax rate

  15. LOCAL CONSIDERATIONS Don’t Hurry!!!!! • Involve the Board • Involve the elected officials representing the school • Involve all other stakeholders • Compute & Communicate the Financial Impact (see illustration)

  16. TAX RATE/REVENUE COMPARITIVE ESTIMATE NET OF RECAPTURE@$1.04@$1.17Difference Local Revenue $21,629,359 $24,020,241 $2,390,882(1) State Revenue $10,302,783$10,456,005$ 153,222 Total Revenue $31,932,142 $34,476,246 $2,544,104 Per Penny Revenue $2,544,104 / 13 pennies = $195,700 (1) Tier II, Level 3 estimated recapture = $312,788

  17. LOCAL CONSIDERATIONS Approach a TRE like a Bond Issue • Communicate it to the public • Seek public input • Coordinate with other special funding needs (bond issues, capital improvements

  18. LOCAL CONSIDERATIONS Determine the Purpose(s) for the TRE, IF ANY • Teacher Salaries • Minimize fund balance depletion • Maintain pace with inflationary costs • All of the above • Other(s)

  19. LOCAL CONSIDERATIONS Gauge Opposition to the TRE • The Board of Trustees • Taxpayer Watchdog Group(s) • The 65 and older population and their perception of tax rate increases • Special Election vs. General Election and the perception of “stacking the vote”

  20. TAX RATE ELECTION (TRE) THE HISTORICAL CONTEXT

  21. OBSERVATION • Under House Bill (HB) 1 - “It’s not a matter of IF you are going to have a tax rate election, but WHEN you will have it.”

  22. BACKGROUND • 1025 ISDs Statewide - 14 Successful TREs in 2006 (1.37%) - 93 Successful TREs in 2007 (9.07%) - 70 Successful TREs in 2008 (6.8%) • 177 Successful TREs Statewide in 3 Years (17.27%)

  23. BACKGROUND • 2006 – 14 of 15 TREs passed (93%) • 2007 – 93 of 119 TREs passed (78%) • 2008 – 70 of 116 TREs passed (60%) • Total 177 / 250 TREs passed (71%) • NOTE: Totals may differ by 1 or 2 with other sources.

  24. BACKGROUND • Districts Conducting 2 TREs - Not Approved/Approved (6) - Approved/Approved (2) - Not Approved/Not Approved (2)

  25. FINDINGS/CONCLUSIONS • 90% of the ISDs conducting TREs have target revenue below the state average ($5,076) • TREs for less than the full 13 cents have a slight advantage but may cause multiple elections.

  26. FINDINGS/CONCLUSIONS • There has been a decline in the passage rates of TREs from 93% (2006) to 71% (2008) • Early elections (October) seem to have better success than those held later (November)

  27. FINDINGS/CONCLUSIONS • 74% of the bond proposals passed in the November 2008 election but only 50% of the TREs passed on this same day???? • The current economic conditions may affect the future success of TREs

  28. FINDINGS/CONCLUSIONS • A TRE is a short-term solution to a long-term problem • TREs are framed in very unique situations in very unique ISDs making comparisons difficult

  29. CONTACT INFORMATION • Doug Karr, Ed.D. • Contracted Services in School Finance • Office Phone: (806) 785-6676 • Cell Phone: (806) 778-6440 • Email: dkarr@suddenlink.net

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