Texas County Progress

The Official Publication of the County Judges and Commissioners Association of Texas

What You Wish Your Constituents Knew About County Government, the County Budget, and the Property Tax

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Per reader request, we publish this article several times a year. We receive regular calls asking for permission to reprint and/or share this story with local community groups and constituents. We welcome you to use this article to help educate the public you work so diligently to serve.

 

By Julie Anderson

Editor

What is County Government?

In the State of Texas, county government is a unit of state government often referred to as “an arm of the state.” However, county government also acts as a unit of local government. Consequently, county governments in Texas perform two basic functions:

  1. Carry out administrative and judicial responsibilities for the State of Texas.
  2. Carry out local government responsibilities for county residents.

County governments can only take those actions specifically authorized by state law. Equally important, Texas counties must do those actions required by state law. Unlike cities, counties have no general ordinance-making authority.

 

As a unit of state government, mandatory county government responsibilities include:

  • Set budget and appropriate tax rate to fund local government.
  • Conduct elections.
  • Process and maintain voter registration.
  • Provide for public safety.
  • Maintain and operate the court and jail system including provision for indigent legal defense.
  • Provide medical care for indigent county citizens.
  • Facilitate the issuance and recording of public documents.
  • Process motor vehicle registration and title transfers.
  • Collect and remit state motor vehicle taxes.
  • Provide local support for state agencies such as Texas Department of State Health Services, Department of Public Safety, Texas Parks & Wildlife, and the Alcoholic Beverage Commission.

 

As part of their commitment to the local community, Texas county governments traditionally seek to provide more than mandatory services. County governments also provide funding for authorized discretionary or optional services, such as parks, community centers, libraries, senior centers, emergency medical and family services, and county fairs. Funds also may be used to support tax incremental reinvestment zones, certain non-profits, and other special programs that enhance the quality of individual lives and the community as a whole.

 

Who is in Charge of County Government?

 

County government is governed by the County Commissioners Court, comprised of one County Judge and four County Commissioners. A major responsibility of the Commissioners Court relates to setting the county budget.  As explained in Chapter 111 of the Local Government Code, Subchapters A, B and C, the county budget officer may be the County Judge, the county auditor, or an appointee, depending on population. During budget development, the Judge and the Commissioners consider the funding necessary for county offices to carry out their mandatory duties. The Commissioners Court must fund these responsibilities first before deciding which discretionary services to provide.

Who Pays for County Government?

The taxpayer funds the majority of county government via the property tax, or ad valorem tax, which is the largest revenue source for Texas counties. About half of Texas’ 254 counties also receive funding from a local county sales tax, which when adopted allowed them to lower their property tax rate.               According to the Texas Constitution, the county cannot levy a tax rate in excess of $.80 per $100 of property value for the county’s general fund, permanent improvement fund, road and bridge fund and jury fund. On top of the $.80, the county is authorized to levy a $.15 road and bridge tax and a $.30 farm-to-market road/flood control tax; however, these taxes are subject to voter approval. In addition, counties on the Gulf of Mexico can levy a special tax for construction of sea walls, breakwaters, or sanitary purposes, not to exceed $.50 per $100 valuation. Counties are also authorized by several statutes to levy certain special purpose taxes. However, these taxes when combined with the general fund tax may not total more than $.80 per $100 assessed valuation. Property tax rates across the state are as varied as the counties themselves, with some counties hovering in the 20- to 30-cent range and others approaching or even reaching the maximum 80 cents.

In addition to the property tax and county sales tax, counties rely on fines and fees; intergovernmental revenue such as federal and state grants, contractual money, and statutory money from the State of Texas; miscellaneous revenues or transfers; and interest.  However, the property tax is the most significant funding source.

Sometimes, the State of Texas provides counties the necessary funds to administer state-mandated services. However, this is not always the case. When the State of Texas requires a service of a county but does not provide the necessary funding, this is called an “unfunded mandate,” whereby the county is forced to produce the necessary funding on its own.  This may present a challenge to counties when working on the county budget and may impact the final property tax rate.

The property tax rate is determined after county properties are appraised.

 

Who Conducts Property Appraisals?

Property appraisals are conducted by appraisal districts, which are charged with identifying and listing the value of all property in the county for taxation. The appraisal district is not part of the city, county or school district. Rather the appraisal district is an independent government. While state law created “centralized” appraisal districts, many counties retained the word “county” in their title, sometimes creating the perception that appraisal districts are part of county government. Again, appraisal districts are not a part of county government.

After identifying, listing and appraising all taxable property within the county, the appraisal district certifies the tax roll. When the roll is certified, it means the property value has been agreed to or has not been challenged by the property owner. The Commissioners Court is not involved in any portion of the appraisal process.

 

How Does the County Set the Tax Rate?

The Commissioners Court approves the budget and sets the tax rate on the appraised properties to help fund the county budget and service any county debt.

Beginning in early August, taxing units take the first step toward adopting a tax rate by calculating and publishing the effective and rollback tax rates.

  • Effective tax rate. The effective tax rate is a calculated rate that would provide the taxing unit 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. The effective tax rate is a starting place. Commissioners Courts review how much money they required the previous year and determine if they need more or less.
  • Rollback tax rate. The rollback rate is a calculated maximum rate allowed by law without voter approval. The rollback rate provides the taxing unit with about the same amount of tax revenue it spent the previous year for day-to-day operations, plus an extra 8 percent increase for those operations, in addition to sufficient funds to pay debts in the coming year. If a unit adopts a tax rate higher than the rollback rate, voters in the unit can circulate a petition calling for an election to limit the size of the tax increase.
  • Actual tax rate. Commissioners Courts set the tax rate based on how much money they will need to fund the county budget and service any county debt. In some cases, this may be the calculated effective tax rate or the rollback rate, but not necessarily so.
  • A concept called “truth in taxation” requires the taxing entity to post the proposed tax rate and conduct hearings if the proposed rate brings in any additional revenue to the entity.

This process is admittedly confusing and has created some common misperceptions:

Incorrect:   The county conducts appraisals.

Correct:     Central appraisal districts, which are not part of county government, conduct appraisals.

Incorrect:   Taxpayers should contact the Commissioners Court if they have problems with their appraisal values.

Correct:     Taxpayers should contact their central appraisal district.

Incorrect:   If the appraised value of my property goes down, then my taxes will automatically go down.

Correct:     If the county adopts the calculated effective tax rate, then the tax rate will be adjusted to bring in the same amount of money for the coming year that was on the tax roll in the last year. In this case, even though the appraised value went down, taxes would go up in order to bring in the same amount of revenue as the previous year.

Incorrect:   An increase in appraisal values is an automatic windfall for counties and other taxing jurisdictions.

Correct:     An increase in value is offset by an automatic lowering of the tax rate that the county must begin with, which is the effective tax rate.

Incorrect:   Counties can raise taxes as high as they want.

Correct:           The amount of taxes needed depends on how much the county needs to fund the county budget and service any county debt. If appraised values go down but budget needs go up, the tax rate will be adjusted to reflect this need. If a county adopts a tax rate higher than the rollback rate, voters can circulate a petition calling for an election to limit the size of the tax increase.

State Judicial Salary Increase and the County Budget – Frequently Asked Questions

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Information Provided by the Office of Court Administration

Q: What impact will the state judicial salary increase enacted by the 83rd Legislature have on counties?

A: The 83rd Legislature increased the salary of state district and appellate judges by 12 percent. Effective Sept. 1, 2013, the state salary of a district judge will increase from $125,000 to $140,000 annually. As explained below, this salary increase affects the amount a county can supplement a district judges’ salary and the minimum salary of statutory county court judges.

  • District Judge Salary Supplement – The increase in salaries for the three levels of courts (trial, intermediate appellate, highest appellate) also resulted in an increase in the salary differentials between the levels of courts provided under Sec. 659.012, Tex. Gov’t Code. Under the new salary differentials, the salary supplement that counties can provide to district judges under Sec. 32.001, Tex. Gov’t Code will be $18,000 annually. The current maximum is $15,000. 1
  • Statutory County Court Judge’s Salary – The salary of statutory county court judges is tied to the salary of the district judges in the counties in which the statutory county court judges serve. Under Sec. 25.0005(a), Tex. Gov’t Code, the minimum salary of a statutory county court judge is “an amount that is not less than $1,000 less than the total annual salary received by a district judge in the county” including contributions and supplements paid by the state or county other than the salary paid to a regional presiding judge. If the salary of a statutory county court judge is not already higher than the new minimum, the Commissioners Court will have to increase the judge’s salary to an amount that is at least equal to the new minimum amount.

 

Q: What is the effective date of the new minimum salary for statutory county court judges and does it require action by the Commissioners Court?

A: The effective date of the new minimum salary amount for statutory county court judges is Sept. 1, 2013. If a statutory county court judge is not already making the minimum amount, effective Sept. 1, 2013, the judge will be entitled to the salary increase regardless of whether the Commissioners Court approves or acts on the matter. See Attorney General Opinion JM – 1138 (1990) which provides that the salary of a statutory county court judge is set “by mandate of the Legislature and is not a matter addressed to the discretion of the Commissioners Court.” The opinion is available at: https://www.oag.state.tx.us/opinions/opinions/47mattox/op/1990/pdf/jm1138.pdf.

 

Q: If the county has not budgeted for the salary increase for statutory county court judges effective Sept. 1, 2013, what options are available to the Commissioners Court?

A: Attorney General Opinion JM-1138 (1990) recognized that though the salary increase was not within the discretion of the Commissioners Court, the question remained whether they could authorize the expenditure after adoption of a budget for the year that included the lesser amount. The opinion concluded that because the statutory county court judge’s salary was a budgeted item, the Commissioners Court had the authority to transfer money from one budget item to another under Sec. 111.010(d) of the Local Government Code. (All three subchapters in Chapter 111 regarding the county budget process have a provision for such a transfer – Sec. 111.010(d), Sec. 111.041(c) and Sec. 111.070(c)(1).) The opinion also stated that if there were not sufficient funds in other budgeted items to cover the expense, the statutory county court judge’s claim for the additional salary could be included in the next year’s budget and paid after the adoption of the budget.

 

Q: Are Commissioners Courts required to publish notice of an increase to district judges’ county salary supplements provided under Sec. 32.001, Tex. Gov’t Code, or of statutory county court judge salaries mandated by the Legislature/statute?

A: A Commissioners Court is not required to publish notice of judicial salary increases as is required by Sec. 152.013(b) of the Local Government Code for elected county or precinct officers. Sec. 152.017(1) of the Local Government Code exempts judges of courts of records from Subchapter B of Chapter 152, and the Sec. 152.013(b) notice requirement is found in Subchapter B.

1 Counties are not prohibited from providing higher supplements to district court judges; however, in such event, the Comptroller of Public Accounts must reduce the amount of state salary paid to a district judge so that the judge’s combined salary from the state and county supplements does not exceed the maximum amount provided under Tex. Gov’t Code Sec. 659.012.  

 

It’s That Time Again… Counties Initiate Budget Process

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Legal document…approved  expenditures…statement of revenue…expenses and fund balances.

While these somewhat clinical descriptions of the county budget are certainly valid, the budget document embodies much more to commissioners courts and the constituents they serve. The facts and figures in the Texas county budget often epitomize a way of life, or at least an intended way of life, if budget planners have their say. For example, consider the following defining phrases used in a training session on the county budget:

A plan of action for the fiscal year

A policy statement by the commissioners court

A vision statement for the county

The Gregg County FY 2013 Adopted Budget includes the following explanation:

As in most Texas counties, the annual budget process is the core planning process for Gregg County. Planning processes for budget operations continue year-round in the form of five-year plans, capital needs assessments, and debt reduction plans. Five-Year Plan. The five-year plan process actually consists of 11 years of revenue, expenditure, and fund balance data for the operating and debt service funds. Five years of actual historical data and the current amended budget form the basis for calculating scenarios for the next five years. Graphs are created to provide visual insight, showing ‘where we’ve been, where we are and where we are going’, assuming the same financial management patterns are continued.

Gregg County launches their formal budget process in April with the formulation of the budget instruction manual, which includes the budget calendar for the year and serves as a guide to department officials.

County Progress asked members of the County Judges and Commissioners Association of Texas (CJCAT) leadership team to explain how they approach the often-arduous task of setting the county budget.

 

Johnson County Judge Roger 

Harmon

CJCAT President

 

Each budget year we send out a request to all elected officials and department heads to send in their budget request. We provide them with a summary of what their budget was last year and also a summary of their actual budget amount spent in the last two years. The request goes to our budget coordinator, who works in my office. When all budgets have been submitted, I set up a specially called commissioners court meeting, and we go over all of the budget requests. When we get our tax rolls in late July, we then have another meeting to see what we can fund and what we cannot fund. The greatest challenge is having enough revenue to fund everyone’s request.

Lubbock County Commissioner Patti Jones

CJCAT First Vice President

 

In a legislative year we watch legislation to see how it might affect our county as far as fees and existing grants.  We also watch for unfunded mandates.  Even though the Legislative Budget Board may indicate there will no fiscal impact on the state, they don’t seem to calculate for us on the local level.  We also ask our department heads and other elected officials to submit a realistic budget, not one that is inflated.  Over the years they have done that, and we have been able to fund most of their requests. The greatest challenge is prioritizing the many requests we receive so we can fund as many as possible.
Brooks County Judge
Raul Ramirez
CJCAT Second Vice President

We consider revenues versus expenses in last year’s budget and previous budgets. We then make adjustments or cuts to our county budget. Brooks County is primarily dependent on oil and gas values. Our greatest challenge is the tax rate, as values have steadily declined every year since 2007. The reality is, it takes more money to operate while less money is coming in.

Hays County
Commissioner

Debbie Gonzales Ingalsbe

CJCAT Immediate Past President

 

When developing the budget I keep in mind the overall needs of our county plus the needs of our employees to provide great and efficient service; however, most importantly, I consider our citizens’ ability to pay their taxes.  These are hard-working individuals whose goal is to provide the best for their families. We also need to consider our large number of retirees who are on a fixed income. The greatest challenge is providing all the services that our citizens want and expect while maintaining a low tax rate.

 

Calhoun County Commissioner
Neil E. Fritsch

President, South Texas Regional
Association

 

In Calhoun County all departments send to the county judge and the county auditor a line-item budget that we believe is needed for the coming year. We then meet with all the departments that wish to explain why they need the additional monies, or ones that just wish to meet to discuss items that may affect the budget. We then prioritize the needs of the county departments and decide how the funding will be distributed according to the amount of anticipated revenue.

Probably the greatest challenge the last several years is to find the balance to continue the needed services that people deserve and expect; maintain our infrastructure (roads, bridges, buildings, etc.); provide and plan for expanded growth; and provide decent wages and benefits for our employees. It is a real challenge to execute when you factor in the increased cost of living, while at the same time your revenue is shrinking or stagnate.

 

Budgeting Handbook

Regardless of individual internal procedures, every county must meet the following standards, according to the Office of the Texas Comptroller:

A. An annual operating budget shall be prepared and adopted for each fiscal year to authorize and control the financial operations of the county government.

B. A budget is the authority for financial operations and a plan that embodies an estimate of proposed expenditures for the coming fiscal year and the proposed means of financing those expenditures. The adopted budget should be integrated with the county’s accounting system to provide a workable system of budgetary accounting and control.

C. The budget should be formulated based on actual and anticipated revenues and other financial resources estimated to be available as provided by law on the last day of each fiscal year to fund the proposed budget for the following fiscal year.

D. The annual operating budget prepared by each county shall provide sufficient information to enable taxpayers and security investors to make informed judgments about the county government’s anticipated financial position and flow of financial resources.

E. To accomplish this, the annual budget shall contain, at a minimum, the following components:

a. A Statement of Indebtedness effective the beginning of the new fiscal year.

b. A Statement of Actual Assessed Property Valuations and Tax Rates.

c. A Tax Collection History for Current and Delinquent Taxes and also Penalties and Interest.

d. A Combined Statement of Financial Position (Cash and/or Fund Balance) including beginning balance, revenues, expenditures, transfers (±) and ending balance.

e. A Recapitulation of the Budget by Fund including anticipated revenues, expenditures, and fund balances.

f. Budget Detail by Fund including a summary of cash and/or fund balance position and detailed revenues and expenditures.

g. Budget Detail by Fund including revenues and expenditures depicting the level of budgetary control.

Step-by-step details including additional statutory requirements such as information on required public hearings can be found in the comptroller’s Budgeting Handbook for Texas Counties 2011 available at http://texasahead.org/lga/finances/budgeting/county_budget/96-853TXCountyBudgetingHandbook.pdf.

 

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