Travis County Commissioners Court
July 29, 2008
Item 23
23. Receive and discuss as necessary the third revenue estimate for the fiscal year 2009 budget process. (county auditor) we will take 24 next.
>> good morning, judge, Commissioners, blaine keith for the auditor's office.
>> good morning.
>> on -- on Monday of last week, we finished the third revenue estimate for you. At the 41.25 sent tax rate. Later in the week, we received the assessed valuation roll from the appraisal district, so at the request of planning and budget, we prepared an amendment to that third revenue estimate. The assessed valuation had gone up, so the effective tax rate went down and p.b.o. Wanted an amended third revenue estimate that kept the tax rate 2.5% above the effective rate. So that rate now is at 40.06 cents. And 32.78 cents of that is in the general fund. Your -- excuse me. Excuse me. Your general fund resources now are 436.4 million. About 2.94 million more than the second, 1.85 million is a change in beginning balance, an increase, because the forecast of expenditures went down. New revenue is up a little less than 1.1 million. There were a -- a couple of budget requests packages added at p.b.o.'s request. They are quite small, each one is one f.t.e., one for jp 5, one for counseling and education services. We did include the 2.3 million for the change in the star flight program that you discussed in court and -- and I'm happy to report that on Thursday of last week the city council acted favorably on that. That step is taken. We did include the fee increases for counseling, education services that you approved on the 15th. And we have the health fund in this revenue estimate. With current enrollment, I'll just -- excuse me -- excuse me. Obviously we won't have the '09 enrollment until we finish the open enrollment period, we will have final numbers for you there in the fifth revenue estimate. We did go through and as we do at every revenue estimate, look at the progress this year and revise some revenue line items, based on what we're seeing. And we did want to stress that -- that, you know, this next year the economy we do not think that it's going to be terribly strong and that some of those line items that traditionally have been going up, we have -- we have been seeing stay the same for '09, that's where we're going to leave them or in some cases they are actually going to decrease a little bit. It's just the nature of the economy we are looking at right now. And we're trying to be, you know, somewhat conservative and not assume that those revenues are going to continue to grow the way they have the last few years we -- we would be in addition to answer any questions, I know susan wanted to talk to you on this estimate, also.
>> according to what I'm seeing here, the increase, $24 -- increase from fiscal year 2008 budget as far as increase to the average household. If you would even though the tax rate is different, 40.006 compared to 42.16 -- for the tax rate of '08 could you explain maybe so the general public will understand, even though you have less of a tax rate, but you have a -- you have an increase to the average homestead, 24 bucks, could you kind of explain to the public exactly what is going on there? Why is that a bump in the increase folks will kind of understand the dynamics of how we are work this? Could you maybe go through that a little bit?
>> uh-huh. The property tax system all of the parts of it are very closely regulated by state law, so we follow those very carefully. And with regard to counties and city's property taxes there is an equalizer in there called the effective tax rate which says you take your value that was on last year, the value that comes on this year, in other words the same properties and the effective tax rate equalizes or gets rid of any inflation in that roll. So for instance that's why you can see that when the value goes up, just talk about current property -- when the value goes up, the tax rate goes down. Those are inversely related. Now, then whatever new value you get, you multiply that tax rate times it. So if we were at the effective tax rate, that's the roll as a whole, as individual properties may move differently, but if your property moved exactly with the rolls and the county for instance established the effective tax rate, homeowners or businesses would not see any increase at all if their property moved with the roll. Now, on new property, that comes on the roll, we apply the tax rate. To get more than the effective tax rate y'all have to vote on that and that is the tax increase. So in your preliminary budget right now, for instance, that is about 2.5% over the effective tax rate. In Texas, that's the way the increase in the tax rate is measured. One of the insurance policies for taxpayers is the roll back rate. What the roll back rate says is that if a government increases the tax rate 8 -- more than 8% over the effective rate, then taxpayers have an opportunity to petition for a roll back election to turn that back. So the roll back rate is 8%. Your preliminary budget is at about 2.5 now. One of the things that -- I think these are important things for the public to hear, is that this county government has been very, very careful in tax rates and I had my staff pull up 206, 207, 208 because in this time other governments in this area have gone to the rollback rate. They have gone to 8%. The city is going again this year to roll back, the last I understood Austin independent school district is going to put an issue on the ballot to go over roll back rate. But as a reminder, in 2006, our rate was 4.81% over the effective tax rate rather than 8, which is the roll back rate comparable to what primarily other governments did. In '07, you went at 1.26% over the effective tax rate. Very, very small increase in taxes. In '08, you went 2.95 instead of 8. So this county Commissioners court has been very, very frugal and conservative with regarding raising the property taxes. Okay the other issue out there that is talked about and is somewhat confusing is, you know, our property values going up, are they going down, I mean, there are real estate crises all over the country, what about us? Are we in a crisis? So the taxable value for '09 and they do that kind of -- there's a lag on that. But the taxable value for the county is roughly $95.3 billion. That's what we're working off this year. Of that $95.3 billion, 3.9 billion are new -- is new construction. So then what we might say is that a good thing? Everyone is worried about there is no construction. But the reality is that that the largest absolute dollar amount of new value that we've had since we have kept track since 1984. So it is not a small number. Now, what percent it is of the roll as a whole, which is another measure, this year the new value, the new construction is about 4.14% of the total roll. That will kind of give you a feeling.
>> uh-huh.
>> and it is higher as we go back, it is higher than '08, '07, '06, '05, '04, it was 5.05 -- 2% in 03. Since '08 this is a fairly healthy -- since '03 this is a fairly healthy amount of new value. Now, what is happening with the weakening of the economy? One of the things that we have done, one more thing that I have to say before weakening is that we have given tax abatements and we are abating basically $871 million to samsung and the domain and that results in a $2.7 million refund to those two organizations. So when you take that rebated value out of new value, then it brings down that percentage somewhat. So it's important to remember there's that rebate in there. Okay. What about protests and that type of a thing? You know we have been kind of nervous about that. Last July, we had $10.7 billion worth of property in the appeals process when the value was certified. That's a year ago. And t cad, the Travis County appraisal district, projected to lose about 15% of has by the time the bills came out, which is in October. This year in may we started out with $28 billion in appeals. Okay. So that's 28 billion compared to 10.7 billion. So the appeals were a whole lot bigger this year than they were in the previous year. So we were very concerned about that. And, you know, I've been worried about that ever since. But --
>> the rule of thumb, 15% on that basically --
>> but -- yeah, what has happened is we have historically lost about 15% of the certified value and when the bills go out. They keep working on that. When you lose an appeal, it doesn't stop you from suing, filing a late-deafened -- filina lawsuit. So the central appraisal district has done a yoeman's job, they have gone through 20 billion, they have settled $20 billion worth of appeals. A fan at that time stick job of moving -- fantastic job of moving through the appeals. What we have now is a little over 8 billion still in appeals and the chief appraisesser expects and we estimate that we could still lose about 15% between now and October. So there is no crisis with the tax roll that we are seeing right now. Our prediction of taxes coming in this fiscal year is pretty much right on the money, what we thought it would be. That is not a crisis. What one does is get pause for concern. We are seeing permits for new building, definitely down. That would be a precursor that if building permits are not being given, we probably won't see as much new value next year. We would just assume that because you have to have a permit in order to build. Because of that we consider that -- that there could be some weakness next year. But as far as the roll this year, you know, everything looks pretty good. The other thing for taxpayers who are watching, because it's somewhat confusing when you are not sitting where we are, is that the trail appraisal district -- central appraisal district is the one that appraises property. That is so that the people who set the tax rate, that's y'all for the county, the tax assessor collector who is elected does not do that process, that is an independent appraisal of the property. Then you set the tax rate against it. That's an independent process, the tax assessor sends out the bill, again as a reminder to save taxpayers money we send out a consolidated property tax bill. It includes school district, it includes a.c.c., the city of Austin, the health district and it includes Travis County. So even though it says Travis County tax assessor, that is a collection effort which we have found to be efficient and cost effective.
>> we still -- we still get calls.
>> I know.
>> when we go out in the community a lot of folks think that we do it all right here from this dais. It's not true.
>> so what happens with the certified roll between the last revenue estimate, we gave you an amended one, is that when he settled out these appeals the value went up. When the value goes up, the effective rate goes down. And when the effective rate goes down. You get less out of new properties inversely related. So that's what you saw, you saw effective rate, the property went up, effective rate went down and the amount that you get on new property is less. So that's why you are seeing that drop. We are always estimating as we are going on, but the certified roll is the one that the law says that you base your budget on. Even though we know it's a dynamic process. It's going to keep moving right until the bills come out. I spoke to the tax assessor and her chief deputy just yesterday to see if they saw any critical collection problems or things on the horizon, they do not. They -- they kind of feel the way we do about property taxes, you know, they are watching but we don't see a -- a crisis at hand. I wanted to give a little more information on the -- time because there's been a lot of discussion. Since the roll went up and effective rate went down from the third revenue estimate to the certification.
>> okay.
>> thank you.
>> anything further? Thank you.
>> thank you very much for the explanation, staff.
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Last Modified:
Tuesday, July 29, 2008 2:51 PM