What You Need to Know When Setting Your Tax Rate

1. What You Need to Know When Setting Your Tax Rate 2011 TASBO Budget Academy January 13-14, 2011

2. Agenda • Important Dates • Calculations • Required Notices • Failure to Comply • Official Action to Adopt the Tax Rate • Rollback Rate and Effective Rate • Rollback Elections

3. 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.

4. 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.

5. 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

6. 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

7. NOTICE (cont) COMPTROLLER'S RECOMMENDED FORM

8. NOTICE (cont)

9. NOTICE (cont)

10. NOTICE (cont)

11. NOTICE (cont)

12. See full page sample at end of presentation.

13. 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.

14. 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).

15. 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.”

16. 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.

17. 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;

18. 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

19. 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

20. Rollback Tax Rate (cont.) • Debt Service Portion of the Rollback Rate:

21. Rollback Tax Rate (cont.)

22. 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

23. 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

24. 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.

25. Questions?

26. 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.