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The Texas Constitution, Property Tax Code and Education Code embody the concepts of truth-in- taxation to require school districts to comply with certain steps in adopting their tax rates. The truth-in-taxation laws have two purposes:
- to make taxpayers aware of tax rate proposals; and
- to allow taxpayers, in certain cases, to roll back or limit a tax increase.
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. Board Policy CCH
Effective tax 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 tax rate will go down and vice versa.
Effective M&O tax rate - House Bill (HB) 1, 79th Legislature, 3rd Called Session amended Section 26.08, Tax Code, to create a new definition for a school district effective M&O rate. The effective maintenance and operations rate is the rate that, when imposed on the current year's taxable value, yields state and local revenue per student equal to the state and local revenue per student for the preceding year including the new funds distributed for property tax relief and additional funding for teacher pay raises and high schools.
Rollback tax rate – The rollback tax rate is a calculated maximum rate allowed by law without voter approval. The rollback rate for Tax Year 2007 and subsequent years is the LESSER of (1) the sum of the current compression percentage (.6667 for 2007) times $1.50 (or times the 2005 M&O rate for school districts with 2005 M&O rates above $1.50), plus 4 cents, plus the rate that is equal to the sum of any differences between the adopted tax rate and the rollback tax rate approved by the voters for 2006 and subsequent years, plus the current debt rate OR (2) the sum of the effective M&O tax rate (previously defined) plus the rate equal to the current state compression percentage times .06 (this amounts to 4 cents in 2007), plus the current debt rate. In future years, the commissioner of education may determine a different compression percentage
If a school district adopts a tax rate that is higher than the rollback rate, school board trustees must hold an election to ask voters to approve the rate. Board Policy CCG
Lubbock ISD shall publish their rollback rates in local newspapers, along with other information about budget and tax revenues in a notice entitled, Notice of Public Meeting to Discuss Budget and Proposed Tax Rate.