Maverick County Commissioners Court miss Tax Rate Adoption Deadline, face limited options at October 3rd Special Meeting

By: Miguel Munoz, Eagle Pass Business Journal, Inc., Copyright 2016

Never before in Maverick County recent history has a local governmental tax entity missed the deadline to adopt a new tax rate for a new fiscal year than Maverick County Commissioners Court did at their September 29, 2016 special meeting, causing Maverick County to face limited options for establishing a new tax rate for 2016-2017 Fiscal Year mandated by state law under the Texas Tax Code.

As a result of Maverick County miscalculating the 2016 tax rate for the 2016-2017 Fiscal Year by omitting the amount of $3,040,863 in sales taxes in 2015 used for maintenance and operations as discovered by alert taxpayers, Maverick County Commissioners Court had to approve the rescission of the previously adopted $0.585 per $100 ad valorem property value tax rate for 2016-2017 Fiscal Year adopted at their September 12, 2016 meeting.  The omission of the sales taxes in the calculation of the 2016 tax rate caused the $0.585 per $100 valuation to be significantly greater than the eight (8%) percent tax increase allowed by law, possibly 13 to 17 cents higher than what it would have been if the sales taxes were. included in the calculation.

As a consequence of Maverick County Commissioners Court not adopting a new tax rate for 2016 before the state law mandate of September 30, 2016, Maverick County now is limited to what tax rate it may adopt pursuant to Section 26.05 of the Texas Tax Code.

Section 26.05 (a) of the Texas Tax Code expressly provides that “the governing body of each taxiing unit, before the later of September 30, 2016 or the 60th day after the date the certified appraisal roll is received by the taxing unit, SHALL adopt a tax rate for the current tax year and shall notify the assessor for the unit of the rated adopted.”

According to Maverick County public records, the Maverick County Appraisal District Chief Appraiser Maggie Duran delivered the 2016 Certified Tax Roll on or about July 15, 2016.  Maverick County published its proposed 2016-2017 Fiscal Year Budget of $17,171,747 on its website on July 29, 2016 according to state law concerning Truth in Taxation.  Maverick County should have adopted a new tax rate for 2016 by no later than September 15th or September 30th, 2016 according to state law.  On September 12, 2016, Maverick County Commissioners Court did adopt the tax rate of $0.585  per $100 valuation thinking that they had complied with state law, except that it was miscalculated due to not adding the amount of $3,040,863 in sales taxes collected in 2015 for maintenance and operations.  Thus, Maverick County Commissioners Court had no choice but to rescind this erroneous and incorrect tax rate of $0.585 per $100 valuation for 2016 after it was brought to light by concerned taxpayers at their September 29, 2016 special meeting.

Concerned taxpayers raised the disturbing issue of how could Maverick County have missed the calculation of the 2015 sales taxes of $3,040,863 in the proposed 2016 tax rate of $0.585 per $100 valuation if the Tax Code expressly provides that sales taxes collected shall be included in the calculation of the new tax rate adopted, the forms provided by the State Comptroller of Texas clearly states that sales taxes collected are to be used in the calculation of the new tax tax rate, and Maverick County Officials such as the County Judge, Tax-Assessor Collector, County Auditor, and Commissioners Court have experience in calculating the tax rate.

Another consequence of Commissioners Court rescinding the previously adopted 2016 tax rate of $0.585 per $100 valuation is that the 2016-2017 Fiscal Year Budget approved on September 12, 2016 is no longer supported and substantiated by the rescinded tax rate, resulting in having a new 2016-2017 Fiscal Year Budget needed to be approved at a possible significant lesser amount and the Tax-Assessor Collector cannot issue the County’s Tax Statements for 2016 on October 1, 2016.

The most important consequence of Commissioners Court rescinding its 2016 tax rate and not having a tax rate for 2016 before September 30, 2016 is that the Texas Tax Code now dictates what limited options they have in approving a new tax rate and budget for 2016-2017.  According to Section 26.05(c) of the Tax Code, “If the governing body of a taxing unit DOES NOT adopt a tax rate before the date required,…the tax rate for the for the taxing unit for that tax year is the LOWER of the effective tax rate calculated for that tax year or the tax rate adopted by the taxing unit for the preceding tax year.”

Since Maverick County did not comply with state law in adopting a tax rate for 2016 by September 30th, Commissioners Court are limited to adopting a new tax rate which is going to be significantly less than the previous $0.585 per $100 valuation as they are either limited to the lower of the effective tax rate calculated for 2016 or the 2015 tax rate.  According to Maverick County’s website, the 2015 tax rate was $0.54766 per $100 valuation and the effective tax rate for 2016 would have been $0.542309 (without the 2015 sales taxes calculated).  The lower of the two is the effective tax rate for 2016 of $0.542309, but the problem is that this does not include the 2015 sales taxes calculation.

The effect of not having calculated the $3,040.863 in 2015 sales taxes in the 2016 effective tax rate of $0.542309 means that there is going to be a $0.12965 cents reduction of the 2016 effective tax rate, lowering it to $0.412614 per $100 valuation.  The consequence of adopting a 2016 tax rate of $0.412614 per $100 valuation is catastrophic as it will cause an estimated loss of $3,873,859 of tax revenues to be collected in 2016-2017 Fiscal Year by Maverick County.   Maverick County Commissioners Court face the possibility of reducing the proposed 2016-2017 Budget of $17,171,747 by the $3,873,859 loss of tax revenues.

This means that Commissioners Court may have to make drastic cuts to the 2016-2017 Budget due to the loss of $3,873,859(Million) in tax revenues, including possible cuts of personnel, benefits, programs, road and bridge services, Commissioners Precinct budgets, possible salary reductions, possible reduced law enforcement services, trash collection, fire protection, emergency services,  and many other County services.

Maverick County taxpayers will benefit from significantly lower ad valorem property taxes in 2016, but will pay dearly in the possible lack of services due to a much lower Budget for 2016-2017 Fiscal Year due to the miscalculation of the 2016 Tax Rate resulting from the negligent omission of the $3,040,863 in 2015 sales taxes collected by Maverick County.

It is unknown what action Maverick County Commissioners Court will take at its October 3, 2016 special meeting, but state law certainly limits their options due to their not adopting a 2016 tax rate by September 30, 2016.

Concerned Maverick County taxpayers noted that Section 26.05(e) of the Texas Tax Code provides that “a person who owns taxable property is entitled to an INJUNCTION restraining the collection of taxes by a taxing unit in which the property is taxable if the taxing unit has not complied with the requirements of this section and the failure to comply was not in good faith. An action to enjoin the collection of taxes must be filed prior to the date a taxing unit delivers substantially all of its tax bills.”  Taxpayers are prepared to filing a petition for an Injunction if Commissioners Court do not comply with the Texas Tax Code and Truth in Taxation.