Title
Consider adopting Ordinance No. 3304 to levy and adopt the tax rate for Fiscal Year 2014-15 and take appropriate action.
Body
BACKGROUND:
On July 30, 2014, City Administration submitted the 2014-15 proposed budget to City Council. This budget included a planned property tax rate increase of $0.051 (per $100 valuation) for debt service associated with a joint public safety dispatch, communications and training facility and voter authorized bonds for street improvements. Additionally, in response to strong citizen and City Council support for neighborhood revitalization, City Administration included in the proposed budget consideration of an additional $0.0200 property tax increase to provide dedicated ongoing funding for neighborhood revitalization projects.
The proposed and advertised 2014 tax rate is $0.6241 per $100 valuation and includes both the planned property tax rate increase and the increase related to neighborhood revitalization. These rates were based on certified values received from the Dallas Central Appraisal District on July 23, 2014.
The Texas Constitution and Property Tax Code embody the concept of truth-in-taxation to require taxing units to comply with certain steps in adopting their tax rates. The truth-in-taxation laws have two purposes:
1. To make taxpayers aware of tax rate proposals; and,
2. To allow taxpayers, in certain cases, to roll back or limit a tax increase.
When a proposed tax rate exceeds the rollback rate or the effective rate, whichever is lower, State law requires that the City Council must vote to place a proposal to adopt the rate on the agenda of a future meeting as an action item and schedule two public hearings to hear citizen comments on the proposed rate. On August 5, 2014, the City Council voted to place a proposal to adopt a tax rate on the agenda of September 16, 2014 and scheduled two public hearings on the proposed rate for August 19, 2014 and September 2, 2014. Both public hearings were held, as scheduled, and the meetings were open for citizen comments.
DISCUSSION:
Adopting a rate of $0.6241 (per $100 valuation) for the 2014 tax year (2014-15 fiscal year) on residential and commercial real property and business personal property within the city represents a 7.1-cent increase from the previous tax year. This tax rate exceeds the effective rate by 19.67% and will raise more taxes for maintenance and operations than last year’s tax rate. The maintenance and operations tax rate will effectively be raised by 12.65% and will raise taxes for maintenance and operations on a $100,000 home by approximately $30.75.
A $0.6241 tax rate is distributed as follows: $0.529434 per $100 of assessed value for general fund maintenance and operations distribution and $0.094666 per $100 of assessed value for debt service distribution.
Property Tax Code Section 26.05(b) and Texas Local Government Code, Chapters 102, 111 and 140, have a required motion and notice requirement if a proposed property tax rate exceeds the lower of the effective tax rate or the rollback tax rate and requires a specific statement in the ordinance adopting the rate if the tax rate will raise more revenue for maintenance and operations.
State law requires that this ordinance be passed after the passage of the City’s fiscal year budget and ratification of the property tax revenue increase included in the budget. This ordinance supports Core Value No. 7 (Fiscally Sound Government).
RECOMMENDATION:
City Administration recommends the adoption of Ordinance No. 3304 to levy the tax rate for the 2014 tax year (2014-15 fiscal year) at $0.6241 per $100 of assessed value.
ACTIONS:
1) Motion to adopt Ordinance No. 3304 to levy and adopt the tax rate for 2014-15. In adopting this ordinance, the City Council must state: “I move that the property tax rate be increased by the adoption of a tax rate of $0.6241, which is effectively a 19.67 percent increase in the tax rate.” (Note: This exact statement is required for Truth in Taxation compliance and must be a record vote.)
2) Motion to deny adopting Ordinance No. 3304 to levy and adopt the tax rate for 2014-15.
3) Motion to modify Ordinance No. 3304 to meet the needs of the Council.
4) Motion to table the issue for further study or take no action.
ATTACHMENTS:
1. Ordinance No. 3304