Truth in Millage (TRIM) Process Kent Olson Deputy Treasurer-Clerk City of Tallahassee February 7, 2014

Issues to Discuss: TRIM Calendar Budget Hearing requirements Overview of Truth in Millage (TRIM) TRIM Calendar Budget Hearing requirements Advertisements TRIM Compliance Relevant (and often Required) Forms Maximum Millage and Future Levy Capacity Value Adjustment Board Theatrical Demonstration

What is Truth in Millage (TRIM)? TRIM is under Florida Statutes 200 - Determination of Millage Specifically governed by F. S. 200.065 - Method of Fixing Millage Purpose is to provide taxpayers transparency in how local taxing authorities propose and approve millage rates as part of the taxing authorities’ budget adoption process. Determine whether there is a tax increase proposed (calculate the rolled-back rate)

What is the Rolled-back Rate? The millage rate necessary to raise, in the aggregate, the same amount of money this year from the taxpayers on last year’s tax roll that was raised a year ago (excludes new construction) Levying a millage rate higher than the rolled-back rate will require the taxing body to advertise a tax increase

Truth in Millage (TRIM) Florida Statute Chapter 200 Provides calendar for property tax levy and budget adoption process Outlines requirements to be in compliance Department of Revenue (DOR) is responsible for enforcing compliance

Key Processes TRIM Notice (forms DR-420, DR-420MM-P, DR-420TIF forms) Budget Ordinance & Resolutions Proper Notices and Advertisements Public Hearings DR-422 (before and after VAB) TRIM Compliance Package

TRIM Calendar On or before June 1st - Property Appraiser provides estimated taxable values to local taxing authorities (not technically part of TRIM) July 1 – 1st day of calendar – Property Appraiser provides the Preliminary Tax Roll to all taxing bodies on Form DR-420 This is the basis for levying property taxes in the upcoming year By day 35 (August 4), taxing bodies must file with the property appraiser and the tax collector the tentative millage rate on form DR-420 as well as forms DR-420TIF and DR-420MM-P Also must provide tentative (1st) public hearing date on DR-420

TRIM Calendar (cont.) Notice of Proposed Taxes is distributed by the Property Appraiser no later than day 55 (August 24) Between day 65 (September 3) and day 80 (September 18), taxing authority must hold its first public hearing Within 15 days of holding the first public hearing, the taxing authority must publish an advertisement to adopt the final millage and budget

TRIM Calendar (cont.) Second public hearing must be held between 2 and 5 days after the advertisement has been published Within 3 days after the second public hearing, taxing authority must file its millage rate ordinance with the property appraiser and the tax collector

TRIM Calendar (cont.) End of September or early October - Taxing authorities receive extended roll taxable values from Property Appraiser (DR-422). Taxing authorities have three days to determine if they will adjust their millage rates administratively Within 30 days after the second public hearing, taxing authority files certification (DR-487) and required documentation with the Department of Revenue (DOR) Within 60 days after the second public hearing, the DOR will indicate compliance or non-compliance with the Statute After completion of Value Adjustment Board hearings, Property Appraiser provides taxing authorities with final taxable values

Budget Hearings Per F.S. 200.065, School Boards and Counties have priority in selecting public hearing dates School Boards get first priority, Counties are second No other taxing authority can hold its hearing on the same date as the School Boards or Counties Hearings start after 5 p.m. (5:01 p.m. at the earliest, for the Department of Revenue)

Budget Hearings (cont.) At both hearings, millage rate must be discussed first before the Budget; increase over the rolled-back rate must be announced At the first public hearing, the millage rate can be increased from the tentatively adopted millage in July; however, would require a first class mailing to all taxpayers At the second public hearing, the millage rate cannot be increased from the tentatively adopted millage rate at the first public hearing

Budget Hearings (cont.) The general public is allowed to speak before the governing body can take any action of adoption The millage must be adopted before the budget can be adopted No millage can be levied until a resolution or ordinance has been adopted by the taxing authority

Public Hearing

Budget Hearings (cont.) The following must be publicly announced at the hearing before the millage can be adopted: Name of the Taxing Authority Rolled-back rate Percentage of increase over the rolled-back rate Millage to be levied

Ad Publication Requirements If the proposed millage rate is greater than the rolled-back rate, then you must publish a Notice of Tax Increase ad If the proposed millage rate is less than or equal to the rolled-back rate, then you must publish a Notice of Budget Hearing ad In either case, a Budget Summary advertisement is required to be published adjacent to the appropriate “Notice” ad

Notice of Proposed Tax Increase Ad There are size requirements for the Notice of Proposed Tax Increase ad Full 1/4 page Headline type of 18 point or larger May not be published in legal or classifieds Do not deviate from specified language (see TRIM Manual on DOR website)

Notice of Budget Hearing Ad No specific size requirements May not be published in legal or classifieds Do not deviate from specified language

Budget Summary Ad No size requirements Must be published adjacent to the appropriate “Notice” ad Include all budgeted funds, revenues, expenditures and reserves Group by fund type (General, Special Revenue, etc.) Use major classifications to group revenues and expenditures Exclude trust, agency, internal service funds as well as bond proceeds

Budget Summary Ad (cont.) Basically shows flow of funds including reserves available, revenues and expenditures, transfers, yielding in effect a “Total Available” and a “Total Appropriated”, including reserves Must show ad valorem revenue at a level of 95% or greater of the tax levy amount See Examples in TRIM Manual

DOR TRIM Violations/Infractions DOR keeps track of violations or infractions annually “Minor” infractions are noted with the letter the taxing authority receives if the TRIM package is “in compliance” “Serious” violations and how they may be corrected are included in letter of non-compliance

Non-Compliance

Non-Compliance If Department of Revenue review indicates non-compliance with maximum rates Determination within 30 days of submittal deadline (30 days after adoption) Repeat hearing and advertisement process Notice includes “Previous Notice . . In Violation of the Law” Revised millage adopted recertified with State within 15 days of adoption; not sent to PA or TC

Non-Compliance Notice Language THE PREVIOUS NOTICE PLACED BY THE  (name of taxing authority)  HAS BEEN DETERMINED BY THE DEPARTMENT OF REVENUE TO BE IN VIOLATION OF THE LAW, NECESSITATING THIS SECOND NOTICE.

Non-Compliance (cont.) If the Department of Revenue determines non-compliance is remedied & recertified, no penalty If compliance is not recertified, penalty If non-compliance is not remedied, penalty Penalty: 12 months of sales tax revenues

Non-Compliance Corrected If excess taxes are collected, held by tax collector in trust Excess may only be used to reduce taxes in subsequent fiscal year

Relevant Forms DR-420 – Every taxing body completes; the main form in this process DR-420TIF – for reporting tax increment financing districts information DR-420MM-P – Preliminary Maximum Millage DR-420DEBT – Certification of Voted Debt Millage (if applicable)

Relevant Forms (cont.) DR-420MM – Final Maximum Millage DR-422 – May be used to Revise Millage, if permitted DR-487V – Governing Body Vote Record DR-487 – Used to transmit the millage certification package

TRIM Notice Forms Forms are inter-related Complete DR-420TIF first, then DR-420 and DR-420MM-P Should be completed and presented together for policymakers’ review

DR-420 Main purpose is to determine the rolled-back rate and its relationship to the proposed millage rate Property Appraiser completes property value information at the top of the form Form is filed with the property appraiser (original and one copy) and tax collector (one copy) Taxing body completes the remainder of the form (see example)

DR-420 (cont.) Due no later than Thursday, August 4th - 35 days after start of TRIM process Must obtain DR-420MM-P form from DOR website – Property Appraiser does not provide Check the math/data on all forms from the Property Appraiser Complete package consists of three different forms (DR-420, DR-420MM-P, DR-420TIF) Request revised DR forms, as necessary

EXAMPLE – DR-420, p. 1 DR420 Fiscal Year 2014 (Tax Levy Year 2013) Utopia Gardens 1. Current Year Tax Value- Real Property 1,178,512,144 2. Current Year Tax Value - Personal Property 42,155,231 3. Current Year Tax Value - Centrally Assessed Property 13,260,287 4. Current Year Gross Taxable - Operating Purposes 1,233,927,662 5. Current Year Net New Taxable Value 12,268,759 6. Current Year Adjusted Taxable Value (line 4 - line 5) 1,221,658,903 7. Prior Year Final Gross Taxable Value (from prior year DR403) 1,257,978,930 8. Does authority include Tax Increment financing areas (if yes, enter number) 1 9. Does the taxing authority levy a voted debt service or millage voted for 2 years or less? If yes, enter number of DR-420DEBT forms attached No 10. Prior Year Operating Millage Levy 7.7564 11. Prior Year Ad Valorem Proceeds (7) x (10) 9,757,388 12. Amount, if any, paid or applied in prior year as result of a TIF district (sum line (6c) or (7a) for all DR420 TIF forms) 836,743 13. Adjusted Prior Year Ad Valorem Proceeds (line 11 - line 12) 8,920,645

EXAMPLE – DR-420, p. 2 14. Dedicated Increment Value (sum of 6b or 7e for all DR420 TIF forms) 122,483,123 15. Adjusted Current Year Taxable Value (line 6 - line 14) 1,099,175,780 16. Current Year Rolled-Back Rate (line 13 divided by line 15) x 1,000 8.1158 17. Current Year Proposed Operating Millage Rate 8.1150 18. Total taxes at proposed millage rate (line 17 x line 4, div. by 1,000) 10,013,323 19. Check Type of Principal Authority Municipality 20. Check Applicable Taxing Authority Principal 21. Is millage levied in more than one county? No Dependent Special Districts and MSTUs Stop and Sign 22. Total adjusted prior year ad valorem Proceeds of authority, DSDs &MSTUs (Line 13 From all DR420s) 8,920,645 23. Curr. Yr. Agg. Rolled Back Rate (line 22 div. by line 15, mult. by 1,000) 24. Curr. Yr. Ag. Rolled Back Taxes (line 4 x line 23) 10,014,310 25. Total Oper. Ad Valorem Taxes (line 18 from all DR420's) 26. Curr. Yr. Prop. Ag. Millage Rate (line 25 divided by line 4, x 1,000) 27. Curr. Yr. Proposed Rate – as % Chg. Rolled (line 26 divided by line 23) -1, x100 -0.01%

DR-420TIF Property Appraiser completes property value information on the TIF District at top of form Provided at the same time as DR-420 Information from the DR-420TIF is utilized on DR-420 to help in calculation of the rolled-back rate Form is completed by the taxing authority after the tentative millage rate is adopted by Council Form is filed with the property appraiser (original and one copy) and tax collector (one copy) Minimal information is completed by taxing body

DR-420TIF Example 1. Current Year taxable value in the tax increment area 218,057,384 2. Base Year taxable value in the increment area 89,127,781 3. Current year tax increment value (line 1 minus line 2) 128,929,603 4. Prior year taxable value 195,404,171 5. Prior year tax increment value (line 4 minus line 2) 106,276,390 6. a. Enter proportion on which the payment is based 95.00% 6. b. Dedicated Increment Value (6a) x (3) 122,483,123 6. c. Amount of Payment to Redevelopment Trust in prior year 836,743 7. If amount to be paid to Trust is not based on a proportion of the tax increment value 7 a. Amount of Payment to Redevelopment Trust Last Yr 7 b. Prior Year Operating Millage Levy (Form DR420, line 10) 7 c. Taxes Levied on Prior (multiply line 5 by 7b, divide by 1000) 7 d. Previous Yr Payment as Prop of Taxes Levied (7a/7c) 7 e. Dedicated Increment Value (7d) x (1)

DR-420MM-P Used to determine voting levels that will be required based upon the proposed millage rate Form is completed by the taxing authority after the tentative millage rate is adopted by Council Form is filed with the property appraiser (original and one copy) and tax collector (one copy) (see forthcoming example) with DR-420 and DR-420TIF

Maximum Millage Rates Per capita personal income added to the Rolled-back Rate (RBR) only for maximum levy limit calculation purposes No, Virginia, this is not a second or revised RBR For advertisement of a tax increase, only RBR counts Levy limits – majority, 2/3, unanimous

Maximum Levy Limits Majority vote – Rolled-back rate(RBR), plus per capita personal income change Two-thirds vote – 110% of RBR adjusted for per capita personal income Unanimous vote (¾ if 9 or more) – up to 10 Mil Cap Referendum – up to 10 Mil Cap Super-majority vote is of the membership of the governing body, not the members who are present

Example - Form DR-420MM-P, p. 1 DR-420MM-P for FY14 (Levy Year 2013): Utopia Gardens 1. Has your taxing authority levied ad valorem for < 5 yrs? No 2. Current Year rolled-back rate from Current Year Form DR420, line 16 8.1158 3. Prior Year majority vote maximum rate from 2012 Form DR420MM, line 13 7.9471 4. Prior Year operating millage levy from Current Year Form DR420, line 10 7.7564 If line 4 is equal to or greater than line 3, skip to line 11. If less, continue to line 5. 5. Prior year final gross taxable value from Current Year Form DR420, line 7 1,257,978,903 6. Prior year maximum ad val. proceeds with majority vote (3 x 5 div. by 1,000) 9,997,284 7. Amount paid or applied in prior year to a TIF district (C.Y. Form DR420, line 12) 836,743 8. Adjusted prior year ad val. proceeds with majority vote (line 6 minus line 7) 9,160,541 9. Adjusted current year taxable value from Current Year Form DR420, line 15 1,099,175,780 10. Adjusted current year rolled-back rate (line 8 divided by line 9, x 1000) 8.3340 11. Rolled-back rate to be used for maximum millage calculation (line 10, if adjusted, or line 2) 12. Change in per capita Florida personal income 1.0169 13. Majority vote maximum millage rate allowed (line 11 x line 12) 8.4748

Example - Form DR-420MM-P, p. 2 14. Two-thirds vote maximum millage rate allowed (line 13 x 1.10) 9.3222 15. Current year proposed millage rate 8.1150 16. Minimum vote required to levy proposed millage (check one) Majority 17. The selection on line 16 allows a maximum millage rate of:(enter appropriate rate) 8.4748 18. Current Year gross taxable value from Current Year Form DR420, line 4 1,233,927,662 19. Current year proposed taxes (line 15 x line 18, div. by 1000) 10,013,323 20. Total taxes levied at the maximum millage rate(line 17 x line 18, div. by 1000) 10,457,290 21. Current year proposed taxes of all dependent special districts & MSTUs (sum of all lines 19 from each district’s Form DR420MM) 22. Total current year proposed taxes (line 19 plus line 21) 23. Taxes at the maximum millage of all dependent special districts & MSTUs (the sum of all lines 20 from each district's Form DR420 MM) 24. Total taxes at maximum millage rate (line 20 plus line 23) 25. Are proposed taxes on line 22 < or = to taxes on line 24? yes

Example – Form DR-420DEBT

DR-420MM Very similar to DR-420MM-P Form is completed by the taxing authority after the Council has adopted the final millage rate at the second budget hearing Used to verify that the taxing authority adopted a millage rate in accordance with the voting requirements (see example)

Form DR-420MM, p. 1 DR-420 MM for FY 2014 (Levy Year 2013): Utopia Gardens 1. Has your taxing authority levied ad valorem for < 5 yrs? No 2. Current Year rolled-back rate from Current Year Form DR420, line 16 8.1158 3. Prior Year majority vote maximum rate from 2012 Form DR420MM, line 13 7.9471 4. Prior Year operating millage levy from Current Year Form DR420, line 10 7.7564 If line 4 is equal to or greater than line 3, skip to line 11. If less, continue to line 5. 5. Prior year final gross taxable value from Current Year Form DR420, line 7 1,257,978,903 6. Prior year maximum ad val. proceeds with majority vote (3 x 5 div. by 1,000) 9,997,284 7. Amount paid or applied in prior year to a TIF district (Form DR420, line 12) 836,743 8. Adjusted prior year ad val. proceeds with majority vote (line 6 minus line 7) 9,160,541 9. Adjusted current year taxable value from Current Year Form DR420, line 15 1,099,175,780 10. Adjusted current year rolled-back rate (line 8 divided by line 9, x 1000) 8.3340 11. Rolled-back rate to be used for maximum millage calculation (line 10 if adjusted, or line 2) 12. Change in per capita Florida personal income 1.0169 13. Majority vote maximum millage rate allowed (line 11 x line 12) 8.4748

Form DR-420MM, p. 2 14. Two-thirds vote maximum millage rate allowed (line 13 x 1.10) 9.3222 15. Current year adopted millage rate 8.1150 16. Minimum vote required to levy proposed millage (check one) Majority 17. The selection on line 16 allows a maximum millage rate of:(enter appropriate rate) 8.4748 18. Current Year gross taxable value from Current Year Form DR420, line 4 1,233,927,662 19. Current year adopted taxes (line 15 x line 18, div. by 1000) 10,013,323 20. Total taxes levied at the maximum millage rate(line 17 x line 18, div. by 1000) 10,457,290 21. Current year adopted taxes of all dependent special districts & MSTUs (sum of all lines 19 from each district’s Form DR420MM) 22. Total current year adopted taxes (line 19 plus line 21) 23. Taxes at the maximum millage of all dependent special districts & MSTUs (the sum of all lines 20 from each district's Form DR420 MM) 24. Total taxes at maximum millage rate (line 20 plus line 23) 25. Are adopted taxes on line 22 < or = to taxes on line 24? yes

DR-422 Form is prepared by the Property Appraiser once the Final Taxable Value has been established (October 1) Taxing authority has 3 days to return the form to the Property Appraiser Form may be used to adjust millage administratively if the assessed value changes significantly from the July 1 Preliminary Tax Value Definition of “Significantly” More than 1% for cities, counties, schools and water management districts More than 3% for MSTUs and special districts

Example – Form DR-422

DR-487V Used to record the vote of the governing body on the millage rate at the second budget hearing Must list each governing body member and show how they voted individually Form confirms whether the taxing body had the necessary votes to adopt the millage they voted for

Example – Form DR-487V

DR-487 Used to transmit the TRIM Compliance package to the State Due within 30 days of Final Budget hearing (see example)

Example Form DR-487

The Completed Package

Levy Capacity Levying less than Maximum Majority Vote provides additional future capacity – not “use it or lose it” Maximum majority vote millage rate in following year is based upon the prior year maximum majority vote millage rate

Levy Capacity Example Prior Year Maximum Millage Rate with majority vote: 7.9471 (line 3, DR-420MM-P) Prior Year Millage Rate: 7.7564 (line 4, DR-420MM-P) While RBR will be calculated starting with the 7.7564 millage, the Maximum that can be levied by majority vote will begin with the “maximum millage” RBR based upon the 7.9471 Levying less than the maximum rate will create future capacity for the majority vote maximum

Value Adjustment Board Consists of five members: two from the county board of commissioners, one from the school board, and one citizen each appointed by these two boards County appointee must be a homestead property owner School district appointee must own commercial property Adjudicates all appeals of assessed value filed by taxpayers that are not resolved with the property appraiser

Value Adjustment Board (cont.) Costs are shared 60% by the county, 40% by the school district In theory, VAB hearings are to be completed before October 1 of each year (in time for DR-422 to be distributed with final values) Serious backlogs have developed within the last few years, resulting in reductions in assessed value well after the tax bills are sent out

Additional Resources Florida Statutes, Chapter 200 Online Sunshine (www.state.leg.fl.us) DOR – TRIM and maximum millage (http://dor.myflorida.com/dor/property/trim/trimmax.html) DOR – TRIM Compliance Manual (http://dor.myflorida.com/dor/property/trim/)

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