ABILENE, Texas (KTAB/KRBC) — The coronavirus lockdown has had an impact on most everything we do, including local governments and their budgets.
Taylor County Judge Downing Bolls says the county’s revenue will be about $250,000 less than expected because tax income has been cut by the lockdown.
“We need some revenue. I mean that’s really kind of what the bottom of the line is on all this stuff. We’ve got to get some revenue in here,” said Judge Downing Bolls.
Lost revenue has occurred due to COVID-19.
“COVID-19 has obviously affected a lot of businesses, how they operate. We’re still feeling the impact of that,” said Bolls.
The 86th Texas legislature passed Senate Bill 2, known as the Texas Property Tax Relief and Reform Act, but changes won’t be seen in Taylor County until 2021.
The bill reduces the amount of property tax revenue collected because officials believe Texas residents are being driven from their homes due to high taxes.
“There’s no additional tax revenue coming in for the first three months of the year. March the first we will see then the new tax revenue become available to us to start spending,” Bolls says.
The cap to increase taxes is now at 3.5%. If the county decides to raise the cap higher than 3.5%, it must first gain voter approval.
“It really is incumbent on us to stay within 3.5% to try to get the additional tax revenue we need,” Bolls said.
The county is hoping this new change will help them out financially as costs continue to escalate in the area.
“Our budget this year, we had, about $250,00 in revenue, increase in revenue, and we had about $4.2 million in requests,” Bolls said.
As budgets get smaller, officials are trying to figure out a game plan in the midst of this pandemic.
“I mean, it’s going to be a tight, tight, tight budget,” Bolls said. “We’re just having to do it, because we have to do it. We have to get our budget under control.”
Judge Bolls breaks down the The Taylor County Budget and the Texas Property Tax Relief and Reform Act of 2019 as follows:
Taylor County, like all Texas counties, is required to set a budget each year and that budget must be balanced (meaning that revenues must balance with expenditures). The county cannot operate with a budget deficit.
Based on preliminary numbers, it looks as if revenues will actually fall by about $262,000, but requests for new expenditures are up by $3.1 million over last year.
That means that we are going to have to find a lot of money or cut a lot of requests, and we do both of those things through the budget process.
The Property Tax Relief and Reform Act and its impact on the County
In the last session, the 86th Texas Legislature passed Senate Bill 2, more commonly known as the Texas Property Tax Relief and Reform Act of 2019. This bill has been years in coming and is driven by concerns that Texas residents are being driven from their homes because of escalating property taxes and blame local governmental entities for those increases.
So, what exactly does this Act do? It reforms the property tax system in two ways:
(1) it reforms how your property appraisals are set; and,
(2) it caps and contains escalating tax rates set by the local jurisdictions by creating a new mechanism for simplifying the process.
It does so by reducing the amount that the property tax revenue collected may increase year over year from eight percent to 3.5 percent. How does it do this? By requiring voter approval of an adopted tax rate that exceeds that 3.5 percent cap though an automatic rollback election.
It also renames some of the various parts of your tax rate: the “rollback tax rate” becomes the “voter-approval tax rate” and the “effective tax rate” is renamed the “no-new-revenue tax rate.”
YOUR TAYLOR COUNTY TAX RATE IN 2020: 63.4 cents per $100 valuation.
Your County taxes go to three main things: day-to-day costs of operating and maintaining the county (Maintenance and Operations) also known simply as the “M&O” rate; road repairs and upkeep (Road & Bridge); and paying off our bonded indebtedness (Debt Service). Here’s how that looks for the current year.
Maintenance & Operations (M&0) 56.34 cents
Road & Bridge 2.00 cents
Debt Service 5.06 cents
Total 64.30 cents
This is important because the 3.5% cap will affect only the M&O rate and the Road & Bridge rate. Debt service is not part of the 3.5% because it was approved by the voters already.
Here’s how this will affect us this year.
The central Appraisal District will arrive at a set of values and will tell us what the effective tax rate is. The effective tax rate measures the impact of value changes on the current tax rate. If property values go up, the effective tax rate will go down accordingly. If the values fall, then the effective tax rate goes up to offset that reduction. Under the new law, the “effective tax rate” will now be known as the “no-new-revenue tax rate”.
The new law does give the county a new cap of 3.5%, which, if exceeded triggers a rollback election. The rollback tax rate” will now be called the “voter-approval tax rate”. Which means that if the county plans to raise taxes more than 3.5%, it has to be with voter approval. If we stay within 3.5%, it does not force a rollback election.
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