Setting the 2011 Tax Rate: Some Basics

Next month, Commissioner’s Court will vote to approve the tax rate for fiscal year 2011.  Since the process to set the tax rate can be confusing, I thought some basics might be helpful, along with info on when and where you have the best opportunities to be heard.

Since the tax rate is based on appraised values, our number crunchers need to know if and by how much the total value of appraised properties varies from the previous year.  So, the Travis Central Appraisal District provides a certified roll of the previous year’s taxable units on or before July 25th of each year.  (Typically, there are reserves for protests that are taken from the final certified roll). 

Once the Travis Central Appraisal District certifies the appraised values of property in Travis County, our Tax Office works backwards to determine what it would take to collect the same amount of revenue as last year.  This rate is known as the effective tax rate.  The effective tax rate is the rate which, if imposed, would maintain the current revenue stream at the previous year’s level (notwithstanding any additional increase or reduction in spending).  The effective tax rate for fiscal year 2011 is $0.4496, or $0.0281 more than the current fiscal year 2010 adopted rate. 
Why adopt an effective tax rate?  The State requires counties to provide certain services – like courts, jails, etc.  Most of these requirements are unfunded mandates.  In other words, the state requires them but does not provide the funding.  The effective tax rate provides an assurance of resources for the provision of services from year to year.

The tax rate that is actually proposed may be either more than, less than, or equal to the effective tax rate.  This depends on a number of factors, including budgeted expenses and savings in the upcoming year as well as projections for the future.  You may recall that in fiscal year 2010, our Planning and Budget Office implemented spending restrictions to lessen the blow for fiscal year 2011.  It is not an accident that Travis County is one of only seven Texas counties to have the highest possible credit rating - AAA; Planning and Budget Office employees are extremely skilled at determining the best ways of keeping our finances in check.  I should also add that the current “rollback tax rate” is $0.4854.  Though this rate is subject to change slightly before the tax rate is adopted, if the proposed tax rate exceeds the rollback rate, then the voters (you) may call an election to roll back the tax rate.

This year, in addition to regular expenses, we must also consider those new expenses that will probably be imposed by the state.  Texas is looking at an $18 billion dollar shortfall and it is highly likely many of their responsibilities, and therefore costs, will be passed down to local governments. 

Once all of the preliminary budget work is done, the process is opened to the public.  Travis County residents are invited to provide input at a public hearing.  Those hearings will be held on September 21st, 24th, and 28th at 9:00 am in the Commissioners’ Courtroom, 314 W. 11th Street. 
As a County Commissioner, I rely on your input and that of our excellent financial staff to make the best decision.  On September 28, we will vote on the final tax rate.

I hope this summary has brought you a little closer to the process.  Please come and make your voices heard, or email me with your thoughts or question at Karen.Huber@co.travis.tx.us.