1. Calculating Tax Rates and the Procedures to Adopt
Setting the Tax Rate
Calculating Tax Rates and the Procedures to Adopt

2. Session Overview Explain the different tax rates
Discuss the tax rate calendar
Review the procedures to adopt
Statutes and references

3. Explaining Tax Rates Rates & Components
Ad valorem tax
Property tax rate
Effective tax rate
Rollback tax rate
Sales tax rate
Property tax rate components
Maintenance & operations (M&O)
Interest & sinking (I&S)
Collection rates
Current taxes
Delinquent taxes
Ad Valorem – “According to Value”
Property Tax Rate = current adopted rate
Effective Tax Rate = a benchmark rate looking at the big picture
Rollback Rate = a maximum rate that allows the public to take steps to limit the revenue generated for the coming year
Use last adopted rate to calculate both the effective rate and the rollback rates – and all three types of rates are usually made up of 2 parts – a maintenance and operation rate and a debt rate, also called an I&S rate.
M&O – rate to support your general operating expenses for the county
I&S – rate needed to support the coming year’s debt payments
Sales tax rate is calculated to figure how much tax can be saved based on the amount of sales tax that the entity received over the past 4 quarters.

4. Explaining Tax Rates Property Tax Sample
Fiscal Year 2018
Fiscal Year 2019
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
Very simplistic view of two tax rolls.
When there is more value to tax, and the rate stays the same, more dollars come in. But, unless the adjustments lessened the value, $.50 could not have been the effective rate -

5. Explaining Tax Rates Effective Tax Rate
Definition –
Inverse relationship to property value
Calculating the effective rate
Property tax worksheet (Comptroller)
Adjustments that can factor into the calculation
Lost value from prior years
Refunds for prior year
Tax Increment Funds (TIF)
Pollution control exemptions
Properties under protest
New Property
The effective rate is the rate that when applied will bring in the same money in the coming year as was on the roll in the previous year – on the same properties.
Effective rate is an overall rate that is very generic. It is calculated not in the two parts but as a whole, to give a rate that would generate the same revenue for the upcoming year as is currently on the previous year’s roll – when taxing the same properties in each year. BENCHMARK
INVERSE RELATIONSHIP - Obviously, if the value on the new roll is greater, the calculated tax rate will be lower – it does not require as high a rate to generate the same revenue. At the same time, if the value on the new roll is lower, then the calculated rate will be higher since the goal is to find a rate that will bring in the same revenue as in the previous year.
The idea is to provide a beginning point – a benchmark from which to start, and to calculate the rollback rate.
So what are some of the adjustments?

6. Explaining Tax Rates Effective Tax Rate
Fiscal Year 2018
Fiscal Year 2019
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
Effective Tax Rate – rate that generates the same tax levy as year before. Ex: $

7. Explaining Tax Rates Rollback Rate
Definition –
Applies to M&O portion of the rate only
8% generally, subject to some adjustments
Tax refunds from prior years
Enhanced indigent health expenditures
Taxes in a TIF
Property tax collection rate
Sales tax collection rate
The highest rate a jurisdiction can adopt without risking a rollback election.
The rollback rate is determined by calculating an effective maintenance and operations rate one that will generate the same amount of M&O tax dollars as is on the current roll, adding 8% to that, and then adding a rate that will generate the needed revenue to make debt payments for the year.
Once the debt rate is calculated, it may be adjusted by the projected collection rate. Why?
If the unit has adopted the additional sales tax to reduce property taxes, the overall rollback rate will be reduced by the sales tax collection rate.

8. Explaining Tax Rates Rollback Rate
Fiscal Year 2018
Fiscal Year 2019
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
Roll Value
$ ,000
Tax Rate per $100 $
Tax Levy $
REMEMBER – if a unit taxes to pay for debt, the debt rate would be calculated separately and added to the M&O rate + 8% to arrive at the rollback rate.
Tax Rate - $
Effective Rate - $
Rollback Rate - $
Multiply effective rate by to get rollback rate

9. Explaining tax rates One more look
Fiscal Year 2018
Fiscal Year 2019
Roll Value
$ 100,000.00
Tax Rate per $100 $
Tax Levy $
Roll Value
$ 200,000.00
New Value
$ 100,000.00
Tax Rate per $100 $
Tax Levy
$ ,000.00
Just to show the possible impact of one of the adjustments made in the calculation process -
Effective Rate is .50 – Why? New value is excluded from effective tax rate calculation

10. Tax Rate Calendar Budget calendar must sync with the tax rate calendar
Key dates on the tax rate calendar (deadlines
Value estimates – from CAD – April 30
Certified values – from CAD – July 25
Notice of proposed tax rate – September 1
Adoption of a tax rate – before September 30
After certified values are received, effective and rollback rates are calculated and submitted to the governing body by August 7 – or as soon thereafter as practicable.
NOTE: All of the data needed to calculate the rate must be provided in writing to the person responsible for calculation before this date, or the entire process is delayed.
Proposed rate must be published or mailed by September 1st – or the 30th day after receiving the certified roll, whichever is later.
Adoption of the rate must be before September 30, or 60 days after receiving the certified appraisal roll, whichever is later.

11. Tax Rate Calendar Additional Timeframes
Going UP? - proposed rate exceeds the lower of the effective or rollback rates:
Schedule two public hearings prior to the meeting to adopt the tax rate – the dates are included in the published notice and on your website
WHEN SCHEDULING - The second public hearing may not be earlier than 3 days after the first public hearing – the date, time and place of this meeting should be announced at the end of the first public hearing.
Publish required notice in paper
At least 7 days before the first public hearing
Scheduled meeting to adopt the tax rate is 3 to 14 days after last hearing
If the jurisdiction has debt that has been paid off in the previous year, the rollback rate can be lower than the effective rate.
Remember, the debt portion of the rollback rate is calculated and added separately to the M&O rate with the percent of increase. The effective rate uses generically the entire roll (M&O and I&S) to project a rate to bring in the same money as last year.

12. Tax Rate Calendar What if?
The proposed rate is the calculated effective rate or lower -
Propose a rate and publish the required notice in the paper
No hearings
Schedule the meeting to adopt the tax rate

13. Procedures The Public Notice in the Paper
Use the simplified notice
Local Government Code
If someone else prepares it, CHECK IT for correctness
Keep a copy handy for the public hearings
Keep your proof copy from the paper

15. Procedures Hearings & Meetings
Public hearings on the tax rate
What am I supposed to do or say at the hearing?
What if no one shows up?
Meeting to adopt tax rate
Must take a separate vote from the vote on the budget
Adopt the M&O rate and the I&S rate individually
Must be a record vote, and at least 60% of the Court must be in favor to pass
Must have a quorum present at both hearings
Must be within the boundaries of the unit
Must be on a weekday that is not a holiday
Must be in a public building
Must allow taxpayers opportunity to express their views
At least 4 members of court must be present
At least 3 must vote for the rate
County Judge is considered a member for this purpose

16. Procedures Hearings & Meetings
If you are exceeding the effective rate, use the language required by statute for the motion:
"I move that the property tax rate be increased by the adoption of a tax rate of (specify tax rate), which is effectively a (insert percentage by which the proposed tax rate exceeds the effective tax rate) percent increase in the tax rate.“
REMEMBER TO ADOPT THE M&O AND I&S RATES SEPARATELY!
Statement required in the order or resolution adopting the rate
"THIS TAX RATE WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE. THE TAX RATE WILL EFFECTIVELY BE RAISED BY (INSERT PERCENTAGE BY WHICH THE TAX RATE EXCEEDS THE EFFECTIVE MAINTENANCE AND OPERATIONS RATE) PERCENT AND WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $(Insert amount)."
While the code provides specific requirements for the wording of the motion to adopt a rate that is considered an increase, that wording does not address the requirement to adopt the M&O and I&S portions
Additional motions will be required to adopt the separate rates that support the debt and general operating parts of your budget.

17. Procedures Internet posting
Post public meeting and hearing notices
If you adopted a rate that is higher than the effective rate, must place this on your internet homepage:
"(Insert name of unit) ADOPTED A TAX RATE THAT WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE. THE TAX RATE WILL EFFECTIVELY BE RAISED BY (INSERT PERCENTAGE BY WHICH THE TAX RATE EXCEEDS THE EFFECTIVE MAINTENANCE AND OPERATIONS RATE) PERCENT AND WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $(Insert amount)."

18. Session Review We have Problems
What happens if we don’t do all of this?
What if we are late and miss one of the deadlines?
Someone else does all of this, and they just tell me when to be at the meeting…
Failure to comply in good faith with computation or publication of the rates – any taxpayer can seek an injunction to prohibit adoption of your tax rate.
Failure to comply in good faith with the tax rate setting procedures - any taxpayer can seek an injunction restraining the collection of taxes.
*This injunction must be filed prior to the date the unit delivers substantially all of its’ tax bills.
Deadline missed? Go back and re-do, which would probably delay adoption of the tax rate beyond the deadline. In that case, the rate is automatically set at either the effective or previous year’s tax rate, whichever is lower.
If this happens, the governing body must ratify the automatic rate before the 5th date after establishing the rate.

19. Session Review Statutes & References
Tax Code, Chapter 26
Local Government Code, Chapter 140
Texas State Comptroller – Property Tax Assistance Division
Truth in Taxation
Calculation worksheets
Your rates are on there
Texas Association of Counties –
Sample planning calendars and handbooks

20. Closing Final Questions?
Contact Information
Kristeen Roe, CTA, PCC
Brazos County Tax Assessor/Collector
4151 County Park Ct.
Bryan, TX