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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