1 2 3 4 5 6 KERR COUNTY COMMISSIONERS COURT 7 Special Session 8 Monday, October 3, 2005 9 2:00 p.m. 10 Commissioners' Courtroom 11 Kerr County Courthouse 12 Kerrville, Texas 13 14 15 16 17 Adopt FY 2005-2006 Tax Rate 18 19 20 21 22 23 PRESENT: PAT TINLEY, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 DAVE NICHOLSON, Commissioner Pct. 4 2 1 On Monday, October 3, 2005, at 2:00 p.m., a special 2 meeting of the Kerr County Commissioners Court was held in the 3 Commissioners' Courtroom, Kerr County Courthouse, Kerrville, 4 Texas, and the following proceedings were had in open court: 5 P R O C E E D I N G S 6 JUDGE TINLEY: Okay. Let me call to order 7 the special Commissioners Court meeting scheduled for this 8 date and time, Monday, October the 3rd, 2005, at 2 p.m. It 9 is past that time now. The only agenda item we have before 10 us this afternoon is to consider, discuss, and adopt a 11 proposed Fiscal Year 2005-2006 tax rate for Kerr County. We 12 made an effort at this last Friday, only to fall short 13 because the debt service portion was not broken out. And I 14 assume every member of the Court has before it a -- 15 actually, it's a two-stage breakout of that debt service, 16 and the Auditor and the Tax Assessor, I think, collaborated 17 on doing this, and I'm going to leave it to whichever one of 18 them desires to give us an explanation. I see the Tax 19 Assessor looking to the Auditor, so I think that's... Walk 20 us through this thing, would you please? 21 MR. TOMLINSON: We'll try. In trying to 22 determine this rate, I -- I came to the conclusion that you 23 had to -- that you had to make some assumptions, because 24 there's not a clear-cut formula or any guideline that you 25 could use to arrive at this. As a matter of fact, I -- one 10-3-05 3 1 of these scenarios I got from Bill Orr, who is the financial 2 person for Kerrville Independent School District. You know, 3 they -- the school district's been doing this for a long 4 time, and I said -- well, I asked him the question, I said, 5 "Does the Comptroller have any guidelines for this issue?" 6 And he said that -- that they didn't, because in most taxing 7 authorities, the -- the ratio of non -- of exempt properties 8 to the total levy is so small that it's immaterial in most 9 taxing -- taxing districts. So, the Comptroller's office 10 does not have a guideline for this issue. 11 Saying that, I did two -- two scenarios. The 12 first one is -- is I divided the -- the debt service out of 13 the total proposed tax collection. For -- for our budget, 14 we budgeted to collect 9,598,501. Of that, we need 15 1,189,099 for debt service, so I calculated the percentage 16 of each one of those to the total. So, the calculated -- as 17 it turns out, the debt service requires 12.38 percent of 18 the -- of the total collection. So, I applied those 19 percent -- those ratios to the total proposed tax rate of 20 .3587, and doing that it way, I came up with the debt 21 service rate of .044437. Now, the -- the other way is, I 22 made the -- what I -- I made the assumption that -- that 23 the -- that the frozen levy, or the funds we get from the 24 frozen properties, those funding to each -- to the M & O 25 tax fund and the I & S tax fund on a percentage basis. 10-3-05 4 1 In other words, what I did, I got the total 2 tax levy of the unfrozen properties, which is 7,372,004. 3 Now, the levy that we receive from the frozen properties is 4 2,226,497. So, then I -- that equals the 9,598,501, which 5 is the same number as the one above. The percentage of -- 6 of the unfrozen properties to the total levy was .768. The 7 percentage of the frozen properties was .2319. So, then 8 what I did, I -- I applied those percentages to the debt 9 service of 1,189,099, so in that calculation I'm assuming 10 that 275,826 of the un -- of the frozen levy goes to debt 11 service. The remaining part, the 913,273, is -- comes from 12 the unfrozen levy. So, then I calculated a rate on the 2 -- 13 on the 275,000 -- I mean, I'm sorry, on the 913,000, and I 14 did that by -- by dividing that number by the assessed value 15 of the unfrozen properties. Well, the unfrozen properties 16 are $2,150,000,000, so you divide that number into the debt 17 retired by the unfrozen properties of 913,273, and divide 18 that by a hundred, you get .0425. 19 Now, last year the debt retirement levy was 20 .0417, so, I mean, it -- it did increase from the .0417 to 21 .0425. And that's -- to me, that's reasonable, because 22 we're working with a smaller number. We're working with a 23 levy that -- or the assessed value of only the -- the 24 nonexempt properties. Now, that's the assumption I made. 25 You can make any assumption you want to. I mean, you can 10-3-05 5 1 assume that -- that the exempt properties pay none of the -- 2 of the debt retirement. I mean, there's a range from -- 3 from zero to 100. I mean, if you assume that -- that all 4 the -- that the debt service is paid by exempt properties, 5 then your tax rate will be zero, so I think it's more 6 logical to assume that the ratio of -- of the assessed 7 values of each type property get applied to -- to the debt 8 retirement. 9 COMMISSIONER LETZ: I agree with your 10 assumption, but I'm not sure I -- is it -- is it Part A or 11 Part B that does -- that does that assumption? I mean, they 12 both seem -- 13 MR. TOMLINSON: It's Part B. 14 COMMISSIONER LETZ: Part B. 15 MR. TOMLINSON: The second port. 16 COMMISSIONER LETZ: It seems like they're 17 both in proportion. 18 MR. TOMLINSON: Well, they don't -- the first 19 one doesn't take into account that assumption. Truly 20 doesn't. 21 JUDGE TINLEY: For example, the 2005 22 certificates of obligation is part of the debt structure. 23 MR. TOMLINSON: Right. 24 JUDGE TINLEY: However, none of that is 25 allocable to the 65 or disabled. 10-3-05 6 1 MR. TOMLINSON: That's right. 2 JUDGE TINLEY: Because that came into being 3 subsequent to the taxes on those properties being frozen. 4 MR. TOMLINSON: That's correct. 5 JUDGE TINLEY: So, on an ongoing basis, that 6 portion will be inapplicable to the over-65 and disabled. 7 MR. TOMLINSON: That's right. If -- if 8 you -- I mean, it's possible with -- with this ratio, for -- 9 for -- I guess it's possible, or probable that if there's -- 10 if there's a bond election, like for a new jail or 11 something, there -- it's possible that the exempt property 12 owners could pass a bond issue that they would never have to 13 make a payment on it. 14 COMMISSIONER LETZ: In fact, really, I 15 guess -- 16 MR. TOMLINSON: Because -- 17 COMMISSIONER LETZ: -- they can't make a 18 payment on it. 19 MR. TOMLINSON: Because the theory on the 20 freeze is that you can't raise their taxes. I mean, you 21 can't get any new money from those properties. So -- so, in 22 the future, any new money -- any bond money will have to be 23 paid for by the -- by the nonexempt properties. 24 COMMISSIONER LETZ: So, tell Rusty he's not 25 getting a new jail. 10-3-05 7 1 COMMISSIONER WILLIAMS: Tommy, we show the 2 assessed value of the unfrozen property. Why do we not show 3 the assessed value of the frozen property? 4 MR. TOMLINSON: I just think that it's 5 immaterial, because -- because this -- this rate of .7587 -- 6 COMMISSIONER WILLIAMS: Mm-hmm. 7 MR. TOMLINSON: -- only applies to the 8 nonexempt property. You know, rate and value has nothing to 9 do with -- with the property -- with the exempt property. I 10 mean, if John Doe pays $1,500 in property taxes in '04, I 11 mean, the rate could go to a dollar and his values could 12 triple, and he still pays $1,500. So, the -- the way to get 13 to how much money we get from exempt properties has nothing 14 to do with the rate. 15 JUDGE TINLEY: Do you have the Road and 16 Bridge portion there with you? We're going to need that. 17 MR. TOMLINSON: It's the same. It's the 18 .0309. 19 JUDGE TINLEY: Do you have it with you? 20 That's what I need. 21 COMMISSIONER LETZ: We don't have it with us. 22 MR. TOMLINSON: No, I didn't -- I didn't 23 bring that. I didn't bring that part with me. 24 JUDGE TINLEY: Okay. Well, let me go find 25 what I need, then. That's going to need to be part of the 10-3-05 8 1 motion. 2 (Judge Tinley left the courtroom.) 3 MR. TOMLINSON: This is really a convoluted 4 issue in trying to determine this rate, and you just have -- 5 I mean, you have to make some assumptions. And, I mean, I 6 can't stand here and say if it's right or wrong, the rate. 7 COMMISSIONER LETZ: On the -- on the tax 8 statements for the frozen properties, how is that -- and 9 I'm -- 10 MR. TOMLINSON: I can't answer that. 11 COMMISSIONER LETZ: Paula? 12 MS. RECTOR: I'm sorry? 13 COMMISSIONER LETZ: I want you to listen to 14 my question. You might not know or you might know. The tax 15 statements, when they get ready to go out, on the frozen 16 property, what's the rate listed going to be? 17 MS. RECTOR: There's not going to be a rate 18 listed on the frozen property. It's just going to be a 19 combined rate, the county rate and the lateral road rate. 20 It doesn't have a breakout. 21 (Judge Tinley returned to the courtroom.) 22 COMMISSIONER LETZ: So, it will just say 23 here's the assessed value, and here's how much you pay? 24 MS. RECTOR: Here's the rate, times the total 25 rate to give you the tax amount. It doesn't differentiate 10-3-05 9 1 between M & O and I & S. 2 COMMISSIONER LETZ: Right. But just -- does 3 it have a rate on it at all? 4 MS. RECTOR: A total rate. 5 COMMISSIONER LETZ: How can it -- and the 6 rate's going to -- 7 MS. RECTOR: It will be the .3587, which will 8 be the total county rate. 9 COMMISSIONER LETZ: Yeah, but it can't be 10 that, because if their values have been adjusted this year, 11 they went up or down or something has happened to the frozen 12 -- their values, the values weren't frozen; it's the tax 13 that was frozen. So, we know what the tax is going to be. 14 MS. RECTOR: Right. 15 COMMISSIONER LETZ: But we don't know what 16 the rate is. 17 MS. RECTOR: Well, no, no, no, no, no. The 18 rate's going to remain the same. The tax amount is going to 19 be their frozen amount. 20 COMMISSIONER LETZ: So the values aren't 21 changing? 22 MS. RECTOR: Well, the value can change. 23 COMMISSIONER LETZ: But, I mean, I'm just 24 saying if you have a value and you have a rate, you should 25 be able to multiply the two together and get a tax. That 10-3-05 10 1 isn't going to work for the frozen properties any more? 2 MS. RECTOR: No. No, because it's going to 3 show the freeze amount on the statement. 4 COMMISSIONER LETZ: So it will just -- 5 COMMISSIONER WILLIAMS: Dollars and cents. 6 COMMISSIONER LETZ: -- be a percent -- 7 COMMISSIONER WILLIAMS: No, sir, not percent. 8 MS. RECTOR: Yes, dollars and cents. 9 COMMISSIONER LETZ: Seems to me it's going to 10 be confusing if the rate is shown on the statements. 11 MS. RECTOR: Well, no, because Divide and 12 Hunt that I collect for, there's frozen properties out there 13 too. 14 COMMISSIONER LETZ: So they can't -- okay. 15 You can put on it there, and it just doesn't mean anything. 16 MR. TOMLINSON: That's the reason it's not on 17 here. 18 COMMISSIONER LETZ: Okay. 19 COMMISSIONER WILLIAMS: Okay. 20 MR. TOMLINSON: Anybody want to shoot holes 21 in this? I mean, just get with us. 22 COMMISSIONER WILLIAMS: I don't have a better 23 theory. 24 COMMISSIONER NICHOLSON: Tommy, this bottom 25 line number, debt tax .0425, what was that for last year? 10-3-05 11 1 MR. TOMLINSON: It was .0417. 2 COMMISSIONER LETZ: Okay. I make a motion to 3 set the Kerr County tax rates for 2005-2006 year as follow: 4 M & O rate will be .3162, the debt rate .0425, and the Road 5 and Bridge .0309. 6 COMMISSIONER WILLIAMS: Wait a minute. 7 What's the M & O? 8 COMMISSIONER LETZ: M & O is .3162. 9 JUDGE TINLEY: Non-debt. 10 COMMISSIONER WILLIAMS: Where are you getting 11 that? 12 COMMISSIONER LETZ: Off the Judge's sheet. 13 JUDGE TINLEY: You got to back out the .0425 14 out of this .3587. 15 COMMISSIONER WILLIAMS: Okay. 16 COMMISSIONER LETZ: If somebody has a 17 calculator, they can add these up. 18 JUDGE TINLEY: I just did. 19 COMMISSIONER LETZ: Okay. M & O is .3162, 20 the debt rate is .0425, and the Road and Bridge is .0309. 21 And that's a total -- what's the total rate? Yeah, for a 22 total tax rate of .3896. 23 MR. TOMLINSON: Right. 24 MS. RECTOR: Right. 25 JUDGE TINLEY: And your motion is you move to 10-3-05 12 1 adopt those rates? 2 COMMISSIONER LETZ: Yes, sir. 3 JUDGE TINLEY: Okay. 4 COMMISSIONER BALDWIN: Second. 5 JUDGE TINLEY: We have a motion and a second 6 to adopt the Kerr County tax rates for Fiscal '05-'06. Any 7 question or discussion? All in favor of the motion, signify 8 by raising your right hand. 9 (Commissioners Baldwin, Williams, and Letz voted in favor of the motion.) 10 JUDGE TINLEY: All opposed, same sign. 11 (Commissioner Nicholson voted against the 12 motion.) 13 JUDGE TINLEY: The motion does carry. 14 COMMISSIONER BALDWIN: Judge, is there any 15 good reason that we need to rescind the court order from 16 last week? 17 JUDGE TINLEY: Excellent point, Commissioner. 18 I'm glad you brought that up. 19 COMMISSIONER BALDWIN: At some point in our 20 lives. 21 COMMISSIONER LETZ: I think we should do it, 22 but I'm not sure we can do it under today's agenda item. I 23 think we can have it on our next agenda to be -- to rescind 24 it. I agree with that. 25 JUDGE TINLEY: Okay. Any further business, 10-3-05 13 1 gentlemen? We'll stand adjourned. 2 (Commissioners Court adjourned at 2:20 p.m.) 3 - - - - - - - - - - 4 5 6 7 STATE OF TEXAS | 8 COUNTY OF KERR | 9 The above and foregoing is a true and complete 10 transcription of my stenotype notes taken in my capacity as 11 County Clerk of the Commissioners Court of Kerr County, 12 Texas, at the time and place heretofore set forth. 13 DATED at Kerrville, Texas, this 5th day of October, 14 2005. 15 16 17 JANNETT PIEPER, Kerr County Clerk 18 BY: _________________________________ Kathy Banik, Deputy County Clerk 19 Certified Shorthand Reporter 20 21 22 23 24 25 10-3-05