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HomeMy WebLinkAboutIR 7154 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7154 Ott'it J?t To the Mayor and Members of the City Council November 4, 1986 Subject: POTENTIAL BUDGETARY IMPACT OF A SUCCESSFUL PROPERTY TAX ROLLBACK ELECTION The City staff has been requested by the Council to consider the potential impact arf a successful property tax rollback election. The State Property Tax Code provides that the qualified voters of a city may petition for the roll- back of an adopted tax rate if that rate represents an effective increase (as defined in the law) of eight percent or more. In order for rollback election to be called, ten percent of the city's qualified voters must sign a petition in support of the rollback. Advocates of a rollback have ninety days follow- ing the adoption of the tax rate to present the petitions. The city, in turn, has twenty days following submission to determine the validity of the peti- tions. If the petitions are determined to be valid, an election mu-pt be call- ed for not less than thirty nor more than ninety days after the last day on which the city could have acted to approve or disapprove the petitions. The City of Fort Worth's adopted tax rate of $0.739 represents an effective increase of 10.9 percent. As the tax rate was adopted on September 16, 1986, rollback petitioners would have until December 15, 1986 to present the requir- ed signatures, (estimated at this time to be 18,500). Attorney Ed Shack of the Secretary of State's Office has indicated that the petition could be pre- sented to the Mayor in lieu of the City Council, if the petitioners needed all the time allowed by law to gather signatures. Assuming the petitions are pre- sented on December 15, 1986 and that the petitions were judged to be valid, the election would have to be held between February 4 and April/1 5, 1987. According to the Tax Code, the election must be held on an uniform day, if one is available. Saturday, April 4, 1987 is the uniform election day during the period provided by law to conduct the election and would be the date required by law. If the petitions were presented earlier, a uniform election date may not be available and, as a result, a special election would be required. The City Secretary's Office estimates that the cost of a special election to be $75,000. These election costs are, of course, unbudgeted. If the election is held Saturday, April 4, 1987 at the same time as the City Council election, the Tax Rollback election is estimated to cost an additional $7,500. A successful rollback effort would have the practical effect of refunding tax payers approximately 2.9 percent of their current year tax payment. A tax- payer with home valued at $65,000 is scheduled to pay approximately $384 in City taxes this year. The rollback would reduce that tax liability to approx- imately $374, a savings of $10. The dollar impact of the potential rollback is estimated to be about $2.7 mil- lion. Since most taxpayers likely will have paid their taxes by the time of the election, the refunding process would be burdensome and laden with many mechanical problems. The outflow of $2.7 million in cash over a short period of time could potentially cause the City some liquidity problems. #P1 -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS • INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7154 - P.2 To the Mayor and Members of the City Council November 4, 1986 a �ExAy Subject: POTENTIAL BUDGETARY IMPACT OF A SUCCESSFUL +e r3 PROPERTY TAX ROLLBACK ELECTION More worrisome than the mechanics of property tax refunding would be the pro- cess of reducing General Fund expenditures to offset the impacts of the tax rollback. Certain approaches might be considered by City Council: 1. a total hiring freeze for all newly authorized positions as well as those positions becoming vacant due to normal turnover; 2. indefinite deferral of all new programs (primarily in police) and new facilities (i.e. the Southwest Regional Library and fire station number 33) approved in the 1986-87 budget; or 3. across the board percentage budget reductions for all departments. Any of these approaches would severely hamper the planned service improvements of the Public Safety agencies. Training classes for Police Officers would have to be cancelled, planned anti-crime activities would have to be cur- tailed, and the opening of the new fire station would have to be pushed back to a later date. If the Police and Fire Departments were to be exempted from service cuts, then the negative impacts on all other city services would be intensified signifi- cantly. The opening of the new Southwest Regional Library might need to be delayed indefinitely. Our park and street maintenance programs would also be hard hit. Staff does not wish to be alarmist, but a successful rollback election would have significant fiscal ramifications. City Council would need to determine how to accomplish required service level reductions. This would come at the same time that the police expansion is underway, and difficult decisions would need to be made as to whether these public safety improvements should be pur- sued and whether other programs should be terminated or delayed indefinitely. If Council wishes further information on this topic, please let us know. � Dou QPW rm an City Manager DH:bm ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS--