Title
Consider adopting a motion to place a proposal to consider adopting a maximum property tax rate of $0.6056 on the City Council agenda of September 20, 2016; schedule two public hearings on the proposed maximum rate for August 16, 2016 and September 6, 2016; and take appropriate action.
Body
BACKGROUND:
Truth-in-taxation laws require a number of public notices to inform taxpayers about local property taxes. The first notice is an individual notice to a property owner. If the appraised value of a property is greater than last year’s value, the chief appraiser of the county sends a Notice of Appraised Value to inform a property owner of proposed property values and other necessary information. This notice includes an estimate of current year taxes based on the current year’s proposed taxable value and the last year’s tax rate.
The next notice is a Notice of Proposed Property Tax Rate and it must be published in a newspaper of general circulation or mailed to each property owner. The content of the notice depends on whether or not a proposed property tax rate exceeds the lower of the effective or rollback tax rate as calculated under Chapter 26 of the Tax Code. The effective tax rate produces the same amount of operating revenue (adjusted for new construction and debt service changes) as the prior year. The rollback tax rate produces 8% greater operating revenue (adjusted for new construction and debt service changes) than the prior year. Adopting a tax rate greater than the rollback rate allows 7% of registered voters an opportunity to sign a petition that would require City Council to hold a rollback election to determine whether or not the adopted rate could go into effect.
Truth-in-Taxation laws and legislative guidelines require that when a proposed tax rate exceeds the lower of the effective or rollback rate, the taxing unit’s governing body must take a record vote to place a proposal to adopt the rate on the agenda of a future meeting as an action item. [A taxing unit’s governing body cannot vote to adopt a proposal to increase taxes by an unspecified amount.] If the motion passes, the governing body must schedule two public hearings on the proposal. The governing body may not adopt a tax rate at either of the two public hearings. The second public hearing may not be held earlier than the third day after the date of the first hearing. At each hearing, the governing body must announce the date, time and place of the meeting at which it will vote on the tax rate.
The governing body must follow a strict timetable once it holds these public hearings. The meeting to vote on the tax rate must take place no less than three days and no more than 14 days after the second public hearing.
DISCUSSION:
The 2016-17 proposed budget was submitted to the City Council by July 31, 2016 in accordance with the City Charter, and is also available to the public for review on the City’s website, the Farmers Branch Manske Library, Farmers Branch Police Department, and Farmers Branch Senior Center. The proposed budget was developed maintaining the current tax rate of $0.602267. However, this agenda item has been prepared to consider a maximum property tax rate of $0.6056 (per $100 valuation) or an increase of $0.003333 (per $100 valuation) due to debt service associated with the Justice Center improvement bonds approved in May 2016. Tonight’s motion proposes the maximum property tax rate the City will consider, but does not adopt any tax rate. The final adopted tax rate may be less, but not more, than the tax rate proposed tonight.
Dallas County is responsible for calculating and certifying the effective and rollback tax rates for the City, but these rates are not scheduled to be available until August 5th. However, it is anticipated that proposing a maximum property tax rate of $0.6056 will exceed the effective tax rate calculation and, therefore, the City should proceed in following Truth in Taxation guidelines given the strict timetable for compliance and the current City Council meeting schedule. The Notice of Proposed Property Tax Rate is anticipated to be published on or after August 10th. A draft copy of the notice is attached to this agenda item.
In anticipating that the proposed maximum tax rate will exceed the lower of the effective or rollback tax rate, the State Property Tax Code requires that the City Council first pass a motion to propose the maximum tax rate it will consider and set two public hearing dates. Public hearings to discuss the tax rate are proposed to take place on August 16, 2016 at 6:00 p.m. at City Hall and September 6, 2016 at 6:00 p.m. at City Hall during the regular City Council meeting. The City Council will adopt a tax rate at the regular City Council meeting on September 20, 2016 at 6:00 p.m.
RECOMMENDATION:
City Administration recommends that the City Council adopt a motion placing a proposal to consider adopting a maximum property tax rate of $0.6056 for the 2016-17 fiscal year on September 20, 2016 and set public hearings for August 16, 2016 and September 6, 2016 to discuss the proposed rate. The actual adopted rate may be lower than the proposed maximum, but may not exceed this amount. All meetings will be held at 6:00 p.m. at Farmers Branch City Hall Council Chambers located at 13000 William Dodson Parkway, Farmers Branch, Texas 75234.
POSSIBLE COUNCIL ACTION:
1. I motion to approve placing a proposal to consider adopting a maximum property tax rate of $0.6056 on the City Council agenda for September 20, 2016 at 6:00 p.m. (Take record vote and proceed to “2” if passing the motion; otherwise, proceed to “3”.)
2. IF THE MOTION PASSES: I motion to schedule two public hearings on the proposed maximum tax rate of $0.6056 for August 16, 2016 and September 6, 2016. Both hearings will be held at 6:00 p.m. at City Hall Council Chambers located at 13000 William Dodson Parkway, Farmers Branch, Texas 75234.
3. I motion to modify this item to approve placing a proposal to consider adopting a maximum tax rate of $0.____ on the City Council agenda for September 20, 2016 at 6:00 p.m. (Take record vote and proceed to “4” if passing the modified motion; otherwise, proceed to “5”.)
4. IF THE MODIFIED MOTION PASSES: I motion to schedule two public hearings on the proposed maximum tax rate of $0.____ for August 16, 2016 and September 6, 2016. Both hearings will be held at 6:00 p.m. at City Hall Council Chambers located at 13000 William Dodson Parkway, Farmers Branch, Texas 75234.
5. Motion to table the issue for further discussion or take no action.
ATTACHMENTS:
1. 2016 Tax Rate Adoption Calendar
2. Notice of Proposed Maximum Property Tax Rate - Draft