Agenda

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Item # 5.

Work Session and Regular Meeting

Meeting Date:	06/23/2020
Department:	Finance
Pillars:	Gold Standard in Financial Health

AGENDA CAPTION:

Present and Discuss Senate Bill 2 Disaster Declaration Tax Calculation Options.

BACKGROUND:

Senate Bill 2 (SB 2), also known as the Texas Property Tax Reform and Transparency Act of 2019, was passed by the Texas Legislature in 2019. At its most fundamental level, SB 2 reforms the system of property taxation in three primary ways: (1) lowering the tax rate a taxing unit can adopt without voter approval and requiring a mandatory election to go above the lowered rate; (2) making numerous changes to the procedure by which a city adopts a tax rate; and (3) making several changes to the property tax appraisal process.

SB 2 is effective for tax rates adopted after January 1, 2020, and lowered the tax increase a taxing unit can adopt without requiring voter approval from 8% to 3.5%. Additionally, SB 2 makes exceeding the voter approval rate trigger a mandatory election to vote on the tax increase, whereas, previously it triggered the ability of registered voters to petition the taxing unit to hold an election to vote on the tax increase. SB 2 includes a disaster exemption that allows a taxing unit to calculate the Voter Approval Tax Rate at 8% instead of 3.5%.

On March 13, 2020, President Trump declared a national emergency, and Governor Abbott declared a state of emergency for every Texas county due to COVID-19. These actions triggered the disaster exemption in SB 2, which allows a City Council to direct the designated officer or employee to calculate the Voter Approval Tax Rate at 8% instead of 3.5%. The direction must be provided in the form of a resolution of the City Council.

Staff seeks direction on the tax rate calculation as budget preparation continues.

RECOMMENDATION:

Information only, no action necessary.

Attachments
Presentation - Senate Bill 2 Disaster Declaration Tax Rate Options