6/4/2020 V. G. Young Institute of County Government Truth-in-Taxation June Webinar 1 1 SB 2 • New names for rates • New rates • New worksheets • New notices • New taxing unit types • New timeframes • New forms • New databases McCreary, Veselka, Bragg and Allen, P.C. 2 2 New names for rates Effective Tax Rate = No-new-revenue tax rate (NNR) Effective M &O rate = No-new-revenue rate (NNRM&O) Rollback Tax Rate = Voter-approval tax rate (VAR) McCreary, Veselka, Bragg and Allen, P.C. 3 3 1
6/4/2020 New Rates • De minimis tax rate Unused Increment rate • • County Indigent Defense Compensation Expenditures Rate • Eligible County Hospital Expenditures Rate McCreary, Veselka, Bragg and Allen, P.C. 4 4 Who uses De Minimis Rate • Not a School District • County • Not a Special Taxing Unit • Small City (> 30,000) • Not City with more than 30,000 • M&O above 2.5 cents • Not a Water District McCreary, Veselka, Bragg and Allen, P.C. 5 5 De Minimis Rate No-Revenue-Rate M&O Rate $500,000 + Rate = $500,000 levy + Debt Rate Current De Minimis Total Rate Value Component = De Minimis Rate McCreary, Veselka, Bragg and Allen, P.C. 6 6 2
6/4/2020 De Minimis Rate DMR EXCEEDS VAR Example: • Voter-Approval Rate = $0.6412 • Adopted Rate = or < DMR • But > VAR • De Minimis Rate = $0.6544 • Voters can petition • 3% of registered voters • Adopted Rate = $0.6488* • If election passes • Tax Rate is the VAR • *Possibility for petition McCreary, Veselka, Bragg and Allen, P.C. 7 7 Unused Increment Rate • Bank, Reserve, Store, Stock Pile • Difference between VAR* and Actual Tax Rate • Look back 3 years • Unused Increment Rate = Zero for tax years previous to 2020 *Voter-approval rate defined in 26.013 is different than the voter-approval rate in 26.04 McCreary, Veselka, Bragg and Allen, P.C. 8 8 County Indigent Defense Compensation Expenditures Rate Tax Code Section 26.0422 • Creates two rates • Use Lesser of the two • Add to NNR M&O rate McCreary, Veselka, Bragg and Allen, P.C. 9 9 3
6/4/2020 County Indigent Defense Compensation Expenditures Rate Use expenses between July 1, 2018 to June 30, 2019 Preceding year’s expenses (less state grants) X . 05 ÷ Current total value – New property value McCreary, Veselka, Bragg and Allen, P.C. 10 10 County Indigent Defense Compensation Expenditures Rate Use expenses between July 1, 2019 to June 30, 2020 Current Year’s actual expenses (less state grants) – Last year’s expenses ÷ Current total value – New property value McCreary, Veselka, Bragg and Allen, P.C. 11 11 Eligible County Hospital Expenditures Rate • Creates two rate rates • Use Lesser of the two • Add to NNR M&O rate • For a county or city McCreary, Veselka, Bragg and Allen, P.C. 12 12 4
6/4/2020 Eligible County Hospital Expenditures Rate Tax Code Section 26.0443 • Owned or leased by a County • Operated according to Chapter 263 Health & Safety Code Or • Owned or leased jointly by a city and county • Operated according to Chapter 265 Health & Safety Code And • In an area not served by a hospital district McCreary, Veselka, Bragg and Allen, P.C. 13 13 Eligible County Hospital Expenditures Rate Use expenses between July 1, 2018 to June 30, 2019 Preceding year’s expenses (less state grants) X . 08 ÷ Current total value – New property value McCreary, Veselka, Bragg and Allen, P.C. 14 14 Eligible County Hospital Expenditures Rate Use expenses between July 1, 2019 to June 30, 2020 Current Year’s actual expenses (less state grants) – Last year’s expenses ÷ Current total value – New property value McCreary, Veselka, Bragg and Allen, P.C. 15 15 5
6/4/2020 New worksheets McCreary, Veselka, Bragg and Allen, P.C. 16 16 Modifications to calculations • Chapter 42 adjustment • Allowable increase percentage • New rates to NNR M&O • Sales Tax and Debt • Anticipated Collection Rate McCreary, Veselka, Bragg and Allen, P.C. 17 17 Modifications to calculations Last Year’s Levy Portion of taxable value of property that is the subject of appeal under Chapter 42 on July 25 th that is not in dispute (Already have taxable value that was reduced in an appeal under Chapter 42 – Line 5C ) McCreary, Veselka, Bragg and Allen, P.C. 18 18 6
6/4/2020 Modifications to calculations Special Taxing Units • Hospital Districts • Junior Colleges • Proposed M&O Rate of 2.5 cents per $100 or less Adjusted NNR M&O Rate X 1.08 = Voter-Approval Rate McCreary, Veselka, Bragg and Allen, P.C. 19 19 Modifications to calculations Governing body can direct the designated officer or employee to calculate rate according to Special Taxing Units: • If President or Governor declares disaster area • During the current year Continues until earlier of: • second year unless taxable value exceeds value in year of disaster or • the third year McCreary, Veselka, Bragg and Allen, P.C. 20 20 News Alert – COVID-19 McCreary, Veselka, Bragg and Allen, P.C. 21 21 7
6/4/2020 Increase Limit(s) In a declared* disaster area: * Declared by the Counties governor or president Cities ESD Port Authority Navigation Dist. Rec. and Con. Dist. McCreary, Veselka, Bragg and Allen, P.C. 22 22 McCreary, Veselka, Bragg and Allen, P.C. 23 23 McCreary, Veselka, Bragg and Allen, P.C. 24 24 8
6/4/2020 Modifications to calculations Calculation of Debt Tax Rate • Certification of any sales tax funds used to reduce debt (by CFO or Auditor 26.05 (e-1) 2020) • Anticipated Collection Rate (from collector) McCreary, Veselka, Bragg and Allen, P.C. 25 25 Modifications to calculations McCreary, Veselka, Bragg and Allen, P.C. 26 26 Anticipated vs Actual Anticipated Collection Rate • Estimated by Collector • Current Taxes + Delinquent Taxes + Penalties + Interest • Collected by July of the following year Actual Collection Rate (Effective Jan 1, 2020) • Can be more than 100% • Look back three years of actual collections • Anticipated Collection Rate equals lowest year McCreary, Veselka, Bragg and Allen, P.C. 27 27 9
6/4/2020 Anticipated vs Actual • Anticipated 2017 = 98% • Actual 2017 = 100% • Anticipated 2018 = 98% • Actual 2018 = 101% • Anticipated 2019 = 98% • Actual 2019 = 101.5% Anticipated 2020 = 100% McCreary, Veselka, Bragg and Allen, P.C. 28 28 McCreary, Veselka, Bragg and Allen, P.C. 29 29 Lists McCreary, Veselka, Bragg and Allen, P.C. 30 30 10
6/4/2020 LISTS McCreary, Veselka, Bragg and Allen, P.C. 31 31 LISTS McCreary, Veselka, Bragg and Allen, P.C. 32 32 Governing Body Proposes Rate • Sets Date, Time and Place • Public Hearing/Meeting to Adopt • Hold Public Hearing/Meeting If adopting later – no more than 7 days McCreary, Veselka, Bragg and Allen, P.C. 33 33 11
6/4/2020 Governing Body Proposes Rate Notices have: • Names of ALL members of governing body • Record of how each voted • “For” or “Against” proposed tax rate • Indicate any absences • Definition of rates McCreary, Veselka, Bragg and Allen, P.C. 34 34 Governing Body Proposes Rate Notices have: • Information about hearings/elections/petitions • How to calculate a tax • Chart required by 26.062 • Statement about the 86 th Legislature • Where you can find calculations McCreary, Veselka, Bragg and Allen, P.C. 35 35 Notices Tax Code 26.062 McCreary, Veselka, Bragg and Allen, P.C. 36 36 12
6/4/2020 One Notice Either Public Hearing Notice #1, #2, #3 OR Meeting to Vote #50-883 McCreary, Veselka, Bragg and Allen, P.C. 37 37 Public Hearing Notices Three different notices depending on PROPOSED tax rate Notice #50-873 – Tax Code Section 26.06 (b-1) • Proposed rate EXCEEDS both NNR and VAR rates Notice #50-876 – Tax Code Section 26.06 (b-2) • Proposed rate EXCEEDS the NNR but not VAR Notice #50-877 – Tax Code Section 26.06 (b-3) • Proposed rate EXCEEDS the VAR but not the NNR McCreary, Veselka, Bragg and Allen, P.C. 38 38 McCreary, Veselka, Bragg and Allen, P.C. 39 39 13
6/4/2020 McCreary, Veselka, Bragg and Allen, P.C. 40 40 McCreary, Veselka, Bragg and Allen, P.C. 41 41 McCreary, Veselka, Bragg and Allen, P.C. 42 42 14
6/4/2020 McCreary, Veselka, Bragg and Allen, P.C. 43 43 Public Hearing Notices • Mail or Publish in Newspaper and Internet • At least 5 days before meeting • Homepage of website/Until meeting has concluded • How each governing body member voted McCreary, Veselka, Bragg and Allen, P.C. 44 44 Meeting to Vote Notice • Mail or Publish in Newspaper and Internet Tax Code not clear on date to publish (recommend 5 days at least) • Homepage of website/Until meeting has concluded • How each governing body member voted McCreary, Veselka, Bragg and Allen, P.C. 45 45 15
6/4/2020 Comptroller Forms McCreary, Veselka, Bragg and Allen, P.C. 46 46 Information about tax rates Not a school Not a water district Not a small taxing unit McCreary, Veselka, Bragg and Allen, P.C. 47 47 Small Taxing Unit “Low Tax Levies” • Small Taxing Unit Notice • By mail or publishing 7 days before meeting • If notice is published in newspaper Must also post on HOMEPAGE On the Taxing Unit’s website McCreary, Veselka, Bragg and Allen, P.C. 48 48 16
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