Monday, August 24, 2015

Aubrey, TX Tax Rate Shenanigans

My first entrance into local government, was a former mayor telling me that I needed to go take out a loan every August, and repay it in October.  When I asked why, he said that was the only way to keep the tax rate high, otherwise you would be subject to a rollback election.  The rollback is the figure that local governments can raise taxes annually.  However, this process can be manipulated by accruing additional debt.  The debt and operational portions of the budget go into the tax formula.  New short term debt is usually enough to keep the rollback rate higher.   If the rate is higher than the rollback rate, there can be a petition drive, which could overturn the council's decision on the tax rate.

My thoughts on that discussion was, "why on earth would I want to manipulate the tax rate to charge higher taxes”?  That simply did not make good sense to me.  If there was a good enough reason to have the tax rate above the rollback rate, be open and honest with the public and let them decide.  However, transparent government appears to be a thing of the past, and now we are subject secret back room deals, from our local governments all the way to the top.  We should demand transparency in our government at all levels.  

I had thought that the days of seeing officials who are willing to manipulate the system to charge a higher tax rate were behind me.  Unfortunately, in my first budget process with Aubrey, TX, those old shenanigans are still being used.  On August 18, 2015 we had the first of many budget meetings.  This meeting was the one where we approved the proposed tax rate of the 2015/2016 budget. 

The proposed tax rate last year, was at the rollback rate of $0.588482 per $100 valuation.  This year’s proposed rate was at the rollback rate of $.566997 per $100 valuation, a drop of $.02 per $100 valuation.  As this was being explained by the town's financial advisor, there was a discussing of moving $92,000.00 of debt around.  So we were essentially taking out some short term debt to pay off other short term debt.  Which as previously mentioned is a tactic to keep the rollback higher. 
I asked a direct question "are we taking out this debt to keep the rollback rate higher".  Although I asked a direct question, I did not get a direct answer.  The answer talked around the subject and led me to believe that this swapping around was actually retiring debt, which I support.  However, after the meeting, a former local official and Aubrey citizen spoke more in-depth with me about this and it appears as though the sole reason for taking out this debt was to manipulate the rollback rate; to keep taxes higher than is legally allowed without an election.  

I voted to support the proposed rate, with the assumption that what I was told was genuine.  Without the manipulation the rollback rate would be around $.54 per $100 valuation.  Therefore, this manipulation raises the property taxes on Aubrey citizens $.02 per $100 valuation.   

There will be a series of public hearings that will allow the public to weigh and also modify the proposed rate.  I will do everything in my power to not support the debt swap and keep the rollback rate at its genuine rate.  As previously mentioned, if there was a valid reason to keep the rate higher, this should have been clearly explained.  However, due to the manipulation, at this point, I will not support a higher rate than the legitimate tax rate under any circumstance.  If it came down to it, I would circulate a petition for a rollback election myself.

Frankly, it bothers me that we have to even be at the rollback rate, which the highest legal rate that we can charge without an election.  However, some of the previous leaders, left this town in a financial mess.  We have a debt obligation of over $600,000.00 this year.  So to provide basic services, we are forced to stay at the rollback rate.  If we did not, we are subject to be in much more vulnerable position financially. 

According to the Texas Local Government Code, the mayor is the budget officer for the city.  Specifically, Title 4, Subtitle A, Chapter 102 states:

Sec. 102.001.  BUDGET OFFICER.  (a)

The mayor of a municipality serves as the budget officer for the governing body of the municipality except as provided by Subsection (b).

(b)  If the municipality has the city manager form of government, the city manager serves as the budget officer.

The town of Aubrey does not have a city manager form of government, so the budget is solely the responsibility of the mayor.  I am not certain of who all participated in the development of the budget, or who came up the shenanigans, but it is the responsibility of the mayor.

I am thankful that a concerned citizen brought this to my attention, otherwise this scheme would have worked.  Unfortunately, most people are probably unaware that this loophole exists and if they are aware, they are naive and think that their officials would never do this.  Officials can't do things like this when the people are educated and involved. 


Again, I will do everything in my power to get this matter resolved.  I sincerely apologize for not catching this sooner.       

1 comment:

  1. We cannot solve our problems with the same thinking we used when we created them.

    I, Janet Meyers, Mayor of Aubrey, Texas, make no apology for keeping the tax rate higher. The proposed tax rate structure is legal. The City of Aubrey is taking a five-year, 8% note from operations and moving it to a three-year, 2% note on the I&S side.

    Past councils, of which I was a member, have chosen the lowest tax rate possible - which is not always the correct choice. Look around you. Our streets are falling apart (e.g., Caddell Street). Our employees are underpaid (e.g., we have had five fireman leave for higher-paying jobs in the last six months).

    Our city has difficult choices ahead and your commentary would benefit us better if you would make it during the council meetings. Discussion, dissension, commentary - all help us council members make better decisions for our city. I hope that in the future you will join the group discussion.



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