Truth in Taxation, Part 2

by Coy Holcombe.  

Wow!! What a change in the weather! A few minutes ago, I checked a radar estimate of the amount of rain that had fallen in our area. We are in the 7-9 inches range.

Yesterday, we started talking about Truth in Taxation. Today, I want to continue and talk about a few of the definitions that are major components of Truth in Taxation. According to the 2010 Truth in Taxation guide:

After the appraisal district certifies appraised values, school districts take the first step toward adopting a tax rate by calculating the effective, effective maintenance and operations (M & O) and rollback tax rates. (p. 2)

We will look at the definition of these three tax rates:

Effective Rate

The effective tax rate is a calculated rate that would provide the school district with about the same amount of revenue it received in the year before, on properties taxed in both years. If property values rise, the effective rate will go down and vice versa. (p. 2)

Effective Maintenance and Operations Rate

The effective maintenance and operations rate is $1.50 or the 2005 adopted maintenance and operations rate if votes approved a rate higher that $1.50, times the compression rate of 0.6667. (p. 2)

Rollback Rate

The rollback rates is a calculated maximum rate allowed by law without voter approval. More specifically, it is the lesser of:

  • the effective maintenance and operations rate, plus 4 cents, plus the rates that is equal to the sum of any differences between the adopted tax rate and the rollback tax rate approved by the votes for 2006 and subsequent years, plus the current debt rate; or
  • the effective maintenance and operations rate, plus 4 cents, plus the current debt rate. (p. 2)

These three rates are the basis of EISD’s rate calculations. Before any of these calculations can be made, we must have the certified values from our appraisal districts. The appraisal districts provide the values necessary to make these calculations. Without their help, our task would be much more difficult (if not impossible). We will continue our discussion of Truth in Taxation next week. I hope everyone has a great weekend!


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