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    7. 2.    
Regular City Council Meeting
Meeting Date: 08/13/2019  

Information
Agenda Item
Resolution - Finance: Discuss and take any appropriate action concerning property tax rates and impact it may have on City operations, the FY 2019-20 Operating Budget and Capital Program, and consider a resolution adopting a proposed tax rate that will result in additional revenues as outlined in Section 26.05 (d) of the Tax Code of the State of Texas, and setting the dates for public hearings to discuss the proposed tax rate.
Item Summary
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. The rate proposed in the FY 2019-20 Operating Budget is $0.55802 per $100 valuation, which is higher than the 2019 effective rate of $0.536191 and lower than the 2019 rollback rate of $0.574117. The debt rate was decreased from $0.13662 to $0.13178, and the operations and maintenance rate increased from $0.38825 to $0.40309.  The economic development rate remains the same at $0.02315. This budget will raise more revenue from property taxes than last year’s budget by $6,941,281, which is a 7.85% increase from last year.  The property tax revenue to be raised from new property added to the tax roll this year is $2,233,883.
 
The certified values were received from Lubbock Central Appraisal District on July 25, 2019.
 
The approval of this resolution is not the adoption of the tax rate, but is required for the publication of a proposed tax rate and the scheduling of public hearings to discuss the proposed tax rate. The rate that is finally adopted by the City Council in September 2019 will follow two public hearings, two readings of the tax ordinance, and public discussion.

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.

The truth-in-taxation requirements are contained in the Texas Constitution, Chapter 26, Property Tax Code, Article VIII, Section 21 and in S.B. 18 of the 79th Texas Legislature and S.B. 567 of the 80th Texas Legislature.

Effective Tax Rate:

The 2019 effective rate is $0.536191. The effective tax rate is a calculated rate that will provide the City with about the same amount of revenue it received during the prior year on properties taxed in both years.

Rollback Tax Rate:

The 2019 rollback rate is $0.574117. The rollback rate is a calculated maximum rate allowed by law without voter approval. The rollback rate provides the City with approximately the same amount of tax revenue it spent the previous year for day-to-day operations, plus an extra 8% increase for those operations plus sufficient funds to pay debts in the coming year. If the City adopts a tax rate that is higher than the rollback rate, 7% of the registered voters in the City can circulate a petition calling for an election to limit the size of the tax increase.

If the tax rate proposed by the City Council exceeds the effective tax rate or rollback rate, whichever is lower, the City must follow legislative guidelines for proposing and adopting a tax rate. These guidelines include:

1. The City Council must vote to place a proposal to adopt the rate on the agenda of a future City Council meeting as an action item. The vote must be recorded. This guideline will be fulfilled with the passage of this agenda item.

2. The proposal must specify the desired rate. The City Council cannot vote to adopt a proposal to increase taxes by an unspecified amount.

3. If the motion passes, the City Council must schedule two public hearings on the proposal to increase taxes.

4. The City Council must notify the public of the dates, times and place or places for the public hearings and publish information about the proposed tax rate no later than September 1, or the 30th day after the first date that the taxing unit has received each applicable certified appraisal roll.

5. After publishing the required notice, the City must hold two public hearings. Taxpayers must have the opportunity to express their views on the increase at each public hearing. The City Council may not adopt the tax rate at either of the public hearings. At each public hearing, the governing body must announce the date, time, and place of the meeting at which the governing body will vote on the tax rate.

6. The Tax Code requires that the City Council adopt the tax rate no less than three days, but no more than 14 days, after the second public hearing. If the City does not adopt the tax rate during this time period, it must republish the notice of the meeting to adopt the tax rate, with the new date, time, and location to adopt the rate.

The public hearings to discuss the proposed tax rate are scheduled for 4:30 p.m. on August 27, 2019, and for 8:00 a.m. on September 4, 2019, in the City Council Chambers at City Hall.
Fiscal Impact

The cost of the publication of the notices is budgeted in the Adopted FY 2018-19 Operating Budget.

Staff/Board Recommending
  D. Blu Kostelich, Chief Financial Officer

Attachments
Tax Rate Resolution

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