Item 11AL:rty of Nou€tmaiie, i exas
MEMORANDUM
April 13, 2004
TO: Billy Campbell, City Manager
FROM: Shana K. Yelverton, Assistant City Manager (481 -1429)
SUBJECT: Property Tax Reform
Action Requested: City Council discussion of property tax reform proposed by Governor
Rick Perry
Background
Information: Governor Rick Perry announced today that he is calling a special session
of the Texas Legislature to address public school finance. The special
session will begin on April 20. Although the primary subject is school
finance reform, there is every indication that this session will include
discussions of sweeping changes to local government taxing authority.
Legislative History. There has been evidence since the last legislative
session that the legislature's efforts to improve the public school finance
system will likely draw Texas cities into the discussion and could
negatively affect cities' capacity to generate their own revenue, Recall
that the Texas Senate passed a school finance reform bill at that time that
would have proposed to amend the Texas Constitution to cap school
district property taxes at ten cents per $100 valuation, establish a state
property tax, and raise and broaden the state sales tax rate.
At that time, the House rejected this bill, but passed their own bill that
Auld have reduced the annual, maximum increase in appraisals from ten
to five percent. Following the regular session, numerous interim
committees were formed to study school finance. During one of these
meetings, a member of the legislature expressed concern that if' school
property taxes were reduced, cities and counties would seize the
opportunity to substantially increase their property tax collections,
Discussion then began about the creation of a mechanism to prevent cities
and counties from significantly raising property taxes.
New Concerns. In February 2004, the Texas Municipal League reported
on a conference sponsored by the Texas Public Policy Foundation during
which legislators present stated that the legislature would be looking at
ways to statutorily "slow down" local rates, including the possible
requirement that a vote of the public be required to raise municipal taxes..
TML also reported on news articles indicating that the governor's school
Billy Campbell, City Manager
April 13, 2004
Page 2 of 4
finance proposal would likely include provisions to reform the property
tax system, including "severe restrictions on other taxing authorities."
TML's Task Force on the Impacts of School Finance Reform has studied
the issue and developed recommendations in dealing with the proposed
changes. Local government leaders from around the state began to meet
to discuss the matter. In mid - February TML warned that, "Not a day goes
by without new reports of proposals by key state officials to Iimit the
ability of cities and counties to raise revenue. The conventional wisdom in
some Capitol offices seems to be that the moment school property taxes
are reduced or replaced, cities and counties will rush to fill the void with
higher taxes of their own. This is an unfounded fear based on the belief
that local officials are anxious to gouge the taxpayers,."
The Governor's Plan. On March 19, Texas cities were sent a letter from
the Office of the Governor, attached for your review, The correspondence
includes excerpts from his "Educational Excellence Plan." In this
document, Governor Perry outlines a four point plan for "Local Taxpayer
Control and Protection Initiatives: Real and Meaningful Property Tax
Relief for Texans" which will:
Place a 3% hard -cap on annual appraised value increases for residential
homesteads;
Restrain the annual growth in property tax revenue of local governments;
Require majority vote for increases in property tax revenue for local
governments;
■ Assure no new unfunded mandates from state government.
Needless to say, this document has raised numerous concerns with staff.
A response to this plan was prepared as a result of staff and council
members meeting with State Representative Vicki Truitt, a copy of which
is attached.
City Council Response. As noted above, three Council members and staff'
attended a meeting hosted by State Representative Vicki Truitt to discuss
the matter. She listened to our point of view attentively and asked for
some additional information. When asked, she indicated that she had not
yet formed a position on the issue. Staff has been working to schedule a
similar meeting with Senator .lane Nelson, but we have not yet been able
to work out a date.
Staff will discuss the issue with Council during the regularly scheduled
April 20 City Council meeting.
Billy Campbell, City Manager
April 13, 2004
Page 3 of 4
Financial
Considerations: Although there are numerous financial considerations with school finance
reform, not the least of which is the method by which the Texas
Legislature will fund their portion of the responsibility, our discussion on
Tuesday will focus primarily on the impact of the Governor's plan on the
City of Southlake.
Citizen Input /
Board Review: N/A
Legal Review: N/A
Alternatives: Following discussion of the item, Council may direct staff to 1) prepare a
resolution or other form of correspondence to be sent to the Governor and
other state leaders stating the position of the City of Southlake, 2) monitor
the situation and report back to Council periodically, and/or 3) do nothing_
Supporting
Documents: Supporting documents include the following items:
- Correspondence from the Office of the Governor, dated March 19
- Material provided to State Representative Vicki Truitt, dated April 7
Staff
Recommendation: Discuss property tax reform at April 20 City Council meeting„
Cc ' G kao"A
op _..
®FFrGE OF THE GOVERNOR
RICE F'I:RR)
GO�TRNOR
March 1 9, 2004
The Honorable Andy Wambsganss
Mayor
City of Southlake
1400 Main St Ste 270
Southlake, TX 76092
Dear Mayor:
Last week the governor presented a series of measures that will provide Texans with real
property. tax relief and will protect their against uluiecessary tax increases in the future,
Most local officials are working every day to hold down property taxes, but it has proven to be a
hard task — and that is what Governor Perry plans to address with his proposals. Governor Perry
believes a solution requiring caps on property tax revenues is the only sure way to control
property tax levies and also ensure that the savings from a property tax cut enacted by the
legislature are delivered to property taxpayers. But he also recognizes that local officials need
help in slowing the growth of the expenditure side of their budgets.
While we understand that the governor's proposals may cause some initial concern to officials
iilce yourself; 1 want to maKe certain that you are aware of safeguards that the governor believes
will address those issues. I also want to assure you of our willingmess to work with you and your '
offices as we move forward
Governor Perry warms to work with you to control costs and put an end to new unfunded
mandates.
First, the governor will be calling on the legislature to ban new unfunded state mandates — a
frequent complaint that we have heard local leaders raise, Further, as part of that effort, the
govea 3or will be „asking the legislaturederegulate to deregu prggrams to give you the flexibility you
often need to implement them.
Second, the revenue cap the governor is proposing will contain factors to automatically adjust for
inflation and population growth This, along with mandate protection and deregulation, will help
Post Orrkcr Box 1242S AI.;sT<, 'Tr: ns 78711 (>12)463 - 20030 (V0ice) /DIAi.7 -1 -1 Foiz MlIAr Smvlcrs
The Honorable Andy Wambsganss
March 19, 2004
Page 2
you as you manage your budgets. Please be assured that our office is open to discussing with
you or your association any specific areas of concern.
The governor wants to call the legislature into special session in the near future to address
educational excellence and how Texas pays for schools. Property taxes are necessarily part of
�..1u P17;lSC'ss and i5 a r lilt wr' have prz V3L.il s Upene(1 i.ai�4Lr�:Yr l3i1J -iryrth � otir assoc s t;l
discuss these ideas; we want to continue an open dialogue.
On behalf of the governor, we look forward to working with you to develop sound, fiscally
responsible plans that not only ensure that our children achieve their maximum academic
potential but also maintain the positive job creation climate in Texas.
Please feel free to contact me or John Esparza in my office at 512/463-3285, or by e -mail at
jesparza @state.tx us , if you have any questions or want to provide cornrnents or suggestions.
Also enclosed are a fact sheet on the governor's proposal and a copy of a recent opinion - editorial
piece that recently ran in several Texas newspapers.
Sincerely,
Mike Toomey
Chief of Staff
Office of the Governor
MT:rnta
Enclosures
Educational Excellence Plan
LOCAL TAXPAYER CONTROL & PROTECTION INITIATIVES
REAL AND MEANINGFUL PROPERTY TAX R ELIEF FOR T EXANS
Governor Perry's Plan:
■ Protects Texans from uncontrolled and ever - rising property taxes by placing
a 3 percent hard -capr on annual appraised value increases for residential
homesteads.
Gives Texans control over their local government property taxes by
restraining the annual growth in property tax revenue of local governments.
■ Lets Texans authorize more property tax revenue for local governments if
they choose to do so by a majority vote,
■ Assures cities and counties do not receive new unfunded mandates from
state government.
G"� :.. .�= e� � ., � . - ; �:�'�r._ = u": �„ �•_ f � . ��' . m, � . w .ynsi:'.:,r �"" . : �,�wJ
' - .^. '`-�._.m 4 ��w Y • � a�_ lu .. ��.[ 5 �� .= ' 5 T�.��..�
Educational Excelletice Plan
TAXPAYER APPRAISAL RELIEF
What is it? Places a 3 percent hard -cap on annual appraised value increases for
residentlal homesteads. This cap shields individual homeowners from
skyrocketing and arbitrary Increases in the appraisal value of their
property.
Why is It needed? In previous tax reductions, appraisal values increased and ultimately
helped to fill the void. The current cap of 10 percent allows for too
much creep in the appraisal rate leaving taxpayers with much higher
property tax bills.
How does it work? Property appraisals would be limited to an increase of no more than
3 percent each year. The appraisal cap would be lifted when property. is
sold, and the value of the property would return to full market value for
the new owner. New property on the tax rolls for the first time would
not be subject to the cap until the following year.
Educatioftal Excek nce Plan
LOCAL GOVERNMENT REVENUE RESTRAINT
What is it? The revenue cap works in close conjunction with the appraisal caps. It sets a
cap on local government property tax revenue for all local government
entities and allows for an inflation and population growth factor. Any
increase in property tax revenues beyond inflation or population growth
would require local voter approval. Local governments would be protected
against unfunded state mandates,
About half of the states have some form of limitation on the growth of
property tax revenue local governments can levy each year without voter
approval, The most common types of 11mits are a fixed percentacge above the
prior year (Washington at 1 percent; Massachusetts at 2,5 percent; Idaho at'3
percent; Nevada at 5 percent; M €ssissipiai at 10 percent) or a maximum
g.rowth rate tied to the consumer price Index plus the growth in new
construction (Colorado, Michigan; Montana Sobth Dakota.) Exceptions are
generally allowed for debt service and other special purposes.
Why is it needed? Any plan to reduce school property tax rates must include protections so that.
local governments do not use the school tax reductions as an opportunity t_n.-
increase other property tax rates and "fill the void" without voter approval,
Additionally, during the recent real estate boom, local governments clearly
relied on appraised value Increases to increase property taxes well in excess
of the growth In population and inflation. Since 1999, total statewide .
property tax levies have increased an average of 10,4 percent per year.
During this time, school taxes increased an average of 11 percent annually;
and city and county taxes Increased an average of 8.8 percent and 8,9
percent, respectively. The average annual growth in inflation plus population
during this period was 4.5 percent,
How does it work? Under this plan, similar to the revenue limit In Colorado, local governments,
with the exception of school districts, would be :allowed to' increase the
previous year's maintenance and operations property tax revenues by the
consumer price index inflation rate plus a growth factor for new construction.
School districts would have a similar revenue cap and would be allowed to
increase revenues by inflation plus student growth, measured by average
daily attendance. Property taxes for existing debt service would be exempt
from the revenue cap. Revenue increases above this cap must be approved by
a simple majority of voters on uniform election dates..
With the new cap, if maintenance and operations property tax revenues are
_projected to increase more than the revenue limn be cause o an increase l.n
property values, tax rates must automatically decrease to stay within the
limit. Petitions and elections to roll back tax rates would no longer be
required. As a result, local governments will no longer be able to increase
property taxes in lockstep with appraisal increases.
Educational Excellence Plan
SALES PRICE DISCLOSURE
What is it? Requires sales price data for all real property be disclosed at the time
of sale closing. Disclosure would be on a new form that is sent to the
appraisal district and to the state.
Texas is one of a few states that does not have any form of
mandatory sales price disclosure. According to the International
Association of Assessing Officers, 35 states have mandatory sales
price disclosure,
Why is it needed? The fairness and integrity of the property tax. system relies on fair
market value data. Sales data will improve the accuracy of residential,
and commercial appraisals.
Some appraisal districts already have access to sales data through
realtor databases such as M1S while others do not, causing appraisal
inequities between counties. Sales prices are also essential for -
testing the accuracy of appraisals' for the purpose of allocating school
funds,
Now does it work? Under this plan, actual sales price data would be disclosed on a new
form at the time of closing and sent to the appraisal district and the
state comptroller, The data could only be used in a protest hearing
and for the comptroller's annual property value study.
S Educational ExceRence Plan
APPRAISAL BOARD ACcoUNTABILITY
What is it? E=stablishes a five - member appraisal board consisting of:
1. The county judge
2. The mayor of the largest city in the county
3. The mayor of another city selected by all other cities
4. The president of the largest school board and
S. The county tax assessor- collector
How does It work? In addition to administrative duties, the board would be required to
approve and sign the final certified appraisal roll for the county.
Why is it needed? Places accountability with local elected officials for appraisal - district
decision's that affect the property tax base. It means those
responsible for spending property taxes also are accountable for how_
the money is raised.
0
mahiag a Tag Cut a Tag Cut
By Texas Goveria or Rick Perry
Texas families make tough choices each day
regarding their budgets. Ira keeping with the fiscal
discipline exercised by families- across this great
state, I am comrnitted to assuring that government
stretches its dollars in much the same way.
Last year, Texas Legislators proved that Texas can
and will live within its means as millions of Texans
do every day. Now we must turn our attention to
the most important issue facing us: Creating an
education system, that strives for acadernic
excellence while assuring stable and dependable
funding of that system.
For the past several months I have traveled the state
and shared with Texans four principles to guide any
special session on education.
First, we must fine -tune the focus of our schools and
measure success based on the number of students
who reach their maximum potential, not just the
number of students who meet minim standards,
To achieve that end, I proposed a plan that will
provide $500 million . each year to raise the bar of
achievement in our schools and make educational
excellence the goal of every school in this state.
Second, we must maintain our commitment to
equitable public school financing. And I am
convinced we can do this without the divisive
`Robin Hood' funding scheme.
Third, we must ensure any changes to the tax
system, and the way we fund our schools, maintain
and enhance job creation and retention in Texas
And fourth, we must not only cut property taxes, we
roust cap and control them.
I am continuing to work with Lt. Governor
Dewhurst, Speaker Toot. Craddick and other
legislative leaders on a plan to achieve these
principles. I believe we are soaking good. progress.
As we go through this process, it is important for us
to provide Texans not only with property tax relief,
but also with appraisal relief. I am committed to a
comprehensive plan to assure that Texans get real
— eoratrol -and real- pr- otect3on- agai�ast skyroGket�g— -
property tax increases in the future. Tut simply, I
want a tax cut to be a tax cut.
Since 1999; total statewide property tax levies have
increased an average of 10..4 percent each year. That
increase - a combination of local tax hikes and rising
appraisals is more than, twice the combined rate of
the annual growth of inflation and our population
during the same timeframe.
The median sales price of a Texas home is ,just under
$129,000, which puts the average annual property tax
bill on that home - at just over $3,500. Under current
law, even without a higher property tax rate, the
owner sees a $350 increase in then property tax bill
in just one year if their appraisal goes up 10 percent -
the maximum one -year increase allowed under the
law.
My plan sets a cap of 3 percent on annual appraised
value increases for residential homesteads., Three
percent is about the average annual rate of inflation
for the past 12 years.
Today many Texans enjoy protections against rising
property taxes because they are represented by
f1soally responsible local officials. And yet local,
spending as a whole has greatly outpaced inflation
and population growth.. For that reason my plan
imposes a property tax revenue cap on local
governments very similar to the approach used today
is about -half' off America's states. With a reasonable
limit on Local revenue,. 'including room for inflation
and population growth,, we Will remove the system
pressure that causes appraisals to skyrocket or rates
to be raised_ For too long, frustrated Texans have
had little voice in their local property tax rates or in
their local appraisal system.
My proposal empowers local taxpayers. If a local
government needs or wants to increase property tax
revenues, and related spending, they, are free to do so
with the consent of local voters, Homeowners and
taxpayers will have mote power to control their own.
taxpaying .destiny,
State leaders want to make sure that we deliver a
property tax cut with real savings, and not a charade.
The only way to do so is by further limiting local tax
appraisal and revenue growth, and giving taxpayers
more influence. We must ensure that a cut in
- -- proper -ty- taxes -will. mean - Texans -zeal y_.do_pay.less _._
Office of the City Afanager
April 7, 2004
Honorable Vicki Truitt
State Representative
District 98
1256 Main Street, Suite 248
Southlake, Texas 76092 -7624
Bear Representative Truitt:
Thank you for taking the time to visit with staff and council .members on Governor Perry's proposed
property tax reforms.. The specific information you requested during the meeting is attached to this letter.
As you heard from us in our meeting on Monday, the proposed plan creates significant concerns for local
elected officials. To that end, we have attached some talking points addressing each of the governor's
initiatives as described in the document entitled Educational Excellence Plan, provided to local
governments in March.
We applaud your commitment to improve the state's public education system. However, we strongly
urge you to carefully consider any proposal that would cut and/or cap city government, the level of
government closest to the people, and the level of government that provides the bulk of services for our
shared constituents.
We are all firm believers in providing citizens tax relief and we have worked hard to do so, while
providing the level of services wanted in our community. Fundamentally, our elected officials are in the
best position to make decisions regarding local government funding and have direct accountability for the
decisions they make. In short, local control should not be usurped. Our constituents decide each year
whether they approve the budgetary and fiscal decisions that have been made — at the polls.
Please let us know if you have any questions on the materials we are providing. We look forward to
continue to work with you on this matter.
Sincer ,
j pbe
ana
Cc: Southlake City Council
1400 Main Street Suite 460 + Southlake, TX 76092
(817) 481 -1420 • wwwxi.soutWake.tx.us
SOUTHLAKE'S RESPONSE TO GOVERNOR PERRY'S
EDUCATIONAL EXCELLENCE PLAN
"[Governor Perry] recognizes that local officials need help in slowing the growth of the
expenditure side of their budgets."
Response: Each year, the expenditure side of the city budget is examined by the professional
city manager, and local elected officials. Likewise, there are opportunities for the public input
through the Southlake Program for the Involvement of Neighborhoods and through the two
public hearings that are scheduled as part of the process, per the city charter. This process results
in the appropriate balance of services and taxation, based upon consideration of local elected
officials with input from the citizenry served.
"The Governor will be calling on the legislature to ban new unfunded state mandates."
Response Unfunded mandates come in a variety of forms, including paving the way for other
tax exemptions to be granted by local governments, e.g., senior tax freeze. In Southlake, this
exemption will cost an average of $83,000 per year. Will the Governor be willing to end these
types of initiatives? Under its strictest definition, the City of Southlake has few, if any, state
unfunded mandates. In Southlake, most of the unfunded mandates requiring budgeted expenses
are passed down from the federal government. For example, federal employment and
environmental laws require local governments to implement costly policies. it is noted that the
Governor has not promised, nor could he promise, to end federal unfunded mandates.
"[These initiatives] will help you as you manage your budgets."
Respone: Respectfully, we disagree that these initiatives will help us manage our budget.
Imposing initiatives when you do not know or care how they will affect local governments is not
helpful.
Southlake elected officials have done a very good of managing the city's finances. As the
elected officials closest to their constituents, city councilmembers are in the best position to
balance service delivery wants and needs with revenue management. Respectfully, the only help
they need during the budget process is from the public they serve. Political accountability takes
care of the rest.
"Governor Perry's plan protects Texans from uncontrolled and ever - rising property taxes
by placing a 3 percent hard -cap on annual appraised value increases for residential
homesteads.
"[Governor Perry's plan] places a 3 percent hard -cap on annual appraised value increases
for residential homesteads. This cap shields individual homeowners from skyrocketing and
arbitrary increases in the appraisal value of their property."
Response: No one likes to pay taxes. As such, local elected officials are well aware that a rise in
values impacts a homeowner's bottom line as easily as tax rate increases do. In Southlake, this
has led elected officials to target property tax relief to those most in need, those with fixed
incomes.
In 1998, the Southlake City Council increased its over -65 and disabled exemptions from $50,000
to $75,000, This level of exemption exceeds the average over -65 exemption for cities in our area
by 54% and is triple the average for disabled persons. In 2003, the City Council also enacted an
ordinance to freeze senior property values, one of only three cities in our area to have done so at
this time.
If appraised values are "arbitrary," property owners may avail themselves to the Tarrant
Appraisal District (TAD) through its appeal process. Often such appeals can be handled through
the mail or on the phone.
It may be worth noting that, in Southlake, identified market value on the average home is 18%
above the appraised value assigned by TAD, The average taxable value (that is, the amount to
which the tax rate is applied), is less than the appraised value.
"Governor Perry's plan gives Texans control over their local government property taxes by
restraining the annual growth in property tax revenue of local governments."
Response Local government property taxation is controlled by Southlake residents, through
their elected officials. Representative democracy works well, particularly at the local level
where elected officials have tremendous accountability. Additionally, existing truth -in- taxation
laws already effectively protect taxpayer interests. Although it has never happened in Southlake,
there are areas where rollbacks have been successful.
"Governor Perry's plan lets Texans authorize more property tax revenue for local
governments if they choose to do so by a majority vote."
Response Southlake residents authorize their elected officials to make decisions for their, but
are not shy about weighing in on matters of importance. Their perspective is important and
always considered. A requirement to take revenue growth to the voters as a tax increase
undermines the principles of representative democracy, costs taxpayers money, and — given that
every taxing jurisdiction would be required to tape such requests to voters and only on uniform
election dates — makes it unlikely that such an initiative would ever pass. As a result, local
elected officials would be forced to decide between necessary public services.
"In previous tax reductions, appraisal values increased and ultimately helped fill the void."
Response Assuming this refers to the tax "cut" provided by the legislature in 1997, Southlake
offers the following:
• Average home values since 1997 have increased an average of 6.5% a year.
• Exemptions for over -65 and the disabled were increased 50% during same period.
• Senior tax freeze enacted, effective January 1, 2004.
• Southlake has aggressively grown its local economy to minimize impact of the
cost of services. The new construction portion of Southlake's net taxable value
has averaged 70% annually since 1997.
• Alternative sources of funding have been used to supplement property tax
revenues for the provision of needed/wanted services.
• Is it possible that some of the cuts were minimized due to the significant decrease
in state aid to public schools?
"The appraisal cap would be lifted when property is sold, and the value of the property
would return to fall market valued for the new owner. New property on the tag rolls for
the first time would not be subject to the cap until the following year."
Response This will create a highly inequitable tax structure over time, resulting in neighbors
paying disproportionate taxes on properties of the same value, depending on when they purchase
the property. In addition, properties not increasing in value will pay 100% of their tax burden,
while those with escalating market values will pay less in taxes due to being taxed on only a
portion of their value, Recall that Councilmernber Stephen commented on his parent's situation
in California during our meeting. He commented that they were reluctant to sell their house
because of the drastic increases in taxes they would realize as a new property owner. We submit
that this proposal could potentially stymie the sate of homes.
"About half of the states have some form of limitation on the growth of property tax
revenue local governments can levy each year without voter approval."
Res onse: True, but these states also provide annual per capita state aid (financial assistance to
cities), and typically have a state income tax. Southlake receives very little in the way of
financial support from the State of Texas. In fact, the City of Southlake will send $900,000 to
the State of Texas via tickets processed by municipal court for moving violation and other
infractions this year. This year, the City of Southlake will receive $3,500 in grants from the
State of Texas. As such, the per capita contribution to the City of Southlake by the State is
($36.59).
"Any plats to reduce school property tag rates must include protections so that local
governments do not use the school tax reductions as an opportunity to increase other
property trig rates and "fill the void" without voter approval."
Response Local elected officials have a great deal of political accountability, and to insinuate
that the Southlake City Council will opportunistically raise its tax rate to take advantage of the
reductions in the school property tax rate has no factual merit. in fact, the Southlake Council
lowered its tax rate twice in the past ten years and raised it once (following the events of
September 11)� The raised rate was accompanied by substantial cuts in
programs /services /personnel. Note: the only incumbent running for re- election in the year
following the tax rate increase did not draw an opponent. The other open seat had two new
candidates due to term limitations.
"...during the recent real estate boom, local governments clearly relied on appraised value
increases to increase property taxes well in excess of the growth and population and
inflation.."
Response As previously mentioned, average home values in Southlake have increased an
average of 6.5% since 1997. The portion of taxable value attributable to new construction during
the same period, averaged about 70% per year. Southlake has relied on growing its economy to
pay for increased services, such as a new library, police and fire personnel,
"Under this plan ... local governments, with the exception of school districts, would be
allowed to increase the previous year's maintenance and operations property tax revenues
by the consumer price index inflation rate plots a growth factor for new
construction ... Revenue increases above this cap must be approved by a simple majority of
voters on uniform election dates."
Response Note comments above. This revenue cap would be detrimental to the City of
Southlake's budget, while providing little tax relief to Southlake taxpayers. The average
monthly savings to the average homeowner under the Perry plan would have been $11.14 in FY
200203. The impact to the city's budget, however, would have been a decrease in available
revenue of $1.24 million dollars. This is the equivalent of almost four cents on the tax rate..
Applied over a ten -year period, the City of Southlake would have received approximately $8
million less in tax revenues.
Is the state of Texas willing to cap its own revenues?
"Petitions and elections to roll back tax rates would no longer be required."
Response Why shouldn't there be a little effort involved in over - riding the decisions of the
body of local elected officials?
City of 5outhlake
Response to Vicki Truitt's letter
Over -65 Exemptions 50,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Disabled Exemptions 50,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Over- 65113isabled Tax Freeze Effective 111104
NOTE: 70 %n of increase in appraised value was due to new development.
(1)- Pnmarily due to new DPS personnel. The increase in personnel was necessary to respond to the increasing service demands attributable to the continued residential
growth and development.
1997
1998
1999
2000
2001
2002
2003
2004
Tax Rate
0.422
0.422
0.422
0.422
0.422
0.422
0,462
0.462
Appraised Value
1,376,438,373
1,626,619,582
2,138,858,402
2,313,116,821
2,724,010,258
3,314,714,190
3,547,509,758
3,755,314,332
( % change)
21.41%
18.18%
31.49%
8.15%
17.76%
21.69%
7.02%
5.86%
New Development Value
139,499,836
201,444,146
211,324,665
193,245,393
216,861,437
259,525,773
163,915,743
128,310,653
General Fund
11,418,822
12,909,283
14,862,372
16,301,547
16,894,104
17,961,667
19,438,951
20,765,582
(% change)
39.82% (1)
13.05%
15.13%
9,68%
3.63%
6.32%
8.22 %
6,82%
Population
16,850
19,250
21,050
21,519
22,860
23,554
24,150
24,875
( % change)
18.70%
14.24%
9.35%
2.23%
6.23%
3.04 %0
2.53%
3,00%
Over -65 Exemptions 50,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Disabled Exemptions 50,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Over- 65113isabled Tax Freeze Effective 111104
NOTE: 70 %n of increase in appraised value was due to new development.
(1)- Pnmarily due to new DPS personnel. The increase in personnel was necessary to respond to the increasing service demands attributable to the continued residential
growth and development.
CAPITOLOrFICE,
1'.O BOX 2910
AUSTINM 78758.2910
(512)463 -0690
FAX: (512)477 -5770
EZ 508 CAPI TOL EXTENSION
April 5, 2004
Mr, Billy Campbell
HOUSE OF REPRESENTATIVES
Y � ✓
.
VICKI TRUITT
DISTRICT 98
DISTRICT OFFICE:
1256MAIN STREET.SU IT E 248
SOUTH LAKE, TX 76092 -7624
(617)4 &q 8
FAX: (817)488.4099
SOUTI4LAKE TOWN SQUARE
City Manager
City of Southlake
1400 Main St. Suite 460
Southlake, Texas 76092
Dear
t Y 'r
Governor Perry is expected to call a special session of the legislature this spring to address the
crisis in funding for our public schools. No long -term solution to this crisis can be enacted
without changes to the way Texans are taxed by the state, Further, many expect any change
enacted by the Legislature to reduce local property taxes.
Many legislators and taxpayers have expressed concern that if local property taxes are reduced
that some protection is needed to ensure that there will only be limited property tax rate growth
after the legislated relief. It is widely believed that protection from increases to local property tax
rates is needed based on the experience of the state after the 1997 session when legislative action
aimed more than a billion dollars of property tax relief toward property owners. But before the
savings could be realized by the taxpayers, many taxing entities raised rates, and property
appraisals increased to the point that the savings to taxpayers were lost.
To prevent a reoccurrence of this, should property taxes be lowered by some new statewide
initiative, Governor Perry recently proposed limits on annual increases to property taxes. Under
his proposal, annual increases would be limited to three percent annually, with exceptions for
growth and inflation.
In meetings held recently with several local public officials within my district, it has been
brought to my attention that our history and experience since 1997 may be different (depending
upon the specific taxing entity) here in Northeast Tarrant County than what has been experienced
across the state. For example, Grapevine demonstrated that as property valuations have risen,
they have reduced their ad valorem tax rate,
CHAIRMAN, BUDGET AND OVERSIGHT, HOUSE COMMITTEE ON PUBLIC HEALTH
MEMBER. HOUSE COMMITTEE ON APPROPIUATIONS
MEMBER, HOUSE COMM= -E ON CALENDARS
MEMBER. SELECT COMMITTEE ON STATE HEALTH EXPENDITURES
Mr. Billy Campbell
Page 2
April 5, 2004
Please Delp me understand the specifics of your history so that I can be prepared to represent your
interests during the upcoming special session. It would be very helpful if you could send me the
following information, and by way of this letter, I am requesting the information from you.
1) On a year by year basis, how did property tax rates change from 1997 until today?
2) On a year by year basis, how did your appraised value change from 1997 until today?
3) What amount was your budget each year since 1997?
4) During each year, how has your population or student population changed?
(I envision a spreadsheet with each of the previous items listed by year.)
5) What specific actions were taken by your board/council to raise or reduce property tax
rates /levels during the past seven years?
6) To whom and at what rate does your entity offer tax exemptions.
7) If the governor's three percent proposal had been enacted during that time period, how would
that have impacted your finances?
8) If a three percent limit is inappropriate, at what Ievel could limits to annual increases be set to
alleviate concerns about preserving tax relief without causing undue hardship for your entity?
Additionally, I welcome any other suggestions or comments you have regarding the governor's
proposal, or any other issue related to the upcoming special session. These are important times
for Texas and we must work hard to solve our public school finance problems without creating
unintended public financial problems or creating an overwhelming burden on property taxpayers.
It would be most helpful if I could have this information by April 12th. This way we can make
proposals to the legislature for appropriate safeguards where they are needed and avoid
restrictions where they are unwarranted.
Should you have any questions, please do not hesitate to call me,
Sincerely,
Vicki Truitt
State Representative
District 98