Procedural error means lower taxes in Presidio County

PRESIDIO COUNTY – Commissioners were forced to approve the effective tax rate on Friday after a Texas statute revealed they could not legally pass the tax increase they had proposed. The rate commissioners ultimately had to approve will result in lower taxes for Presidio County property owners and lower tax revenues for the county than originally planned.

Commissioners passed a 2019-2020 budget at the Friday meeting and were preparing to approve a proposed tax of $0.61147 per $100 of property value. That came to an abrupt halt when County Jail Records Clerk Katie Sanchez asked County Auditor Patty Roach if the county could approve an increase without holding two public hearings about the tax increase.

Sanchez cited Texas statutes that backed up her question. As Roach began reexamining the state requirements, Judge Cinderela Guevara called a recess to figure out what commissioners were legally allowed to do.

The judge immediately consulted with Texas Association of Counties (TAC) lawyers. When she reconvened the court session an hour and a half later, she told commissioners that “because we did not have the public hearings, we do need to adopt the effective tax rate.”

Then Roach explained the effects: the county would see a decrease in Maintenance and Operations (M&O) revenue but an increase in Interest and Sinking (I&S) revenue –– a fund that pays off county debts. Guevara said that since the county is due to pay off its current debts this December, there will likely be remaining I&S dollars, which the county can legally move into the general fund. That may help dampen the effects of a potential shortfall. The auditor also hoped that her conservative revenue estimates would result in a cushion that might cover the error.

Roach said passing the effective rate instead of the rollback rate would result in a roughly $22,000 to $25,000 “loss in revenue,” if commissioners do move I&S money into the general fund. The auditor emphasized that those were rough, “on-the-fly” calculations during the meeting, and firmer numbers would be available later, though they were not by press time.

Auditor Roach had previously told Guevara that because the county was not attempting to exceed the rollback rate, they would not need to have public hearings. The county judge is ultimately the budget officer in counties with fewer than 225,000 residents, according to TAC, but the two public officials both expressed their regret in misunderstanding the state and local laws.

Judge Roy Ferguson ordered the county to have a county auditor in 2013, when the county was struggling to manage its finances and get up to date on its audits. The judge appointed Roach and renewed her term earlier this year. Ferguson could not be reached for comment regarding the county’s financial oversight by press time.

Roach steered the budget workshops this year, helping the county construct a balanced budget that even had an $11,600 surplus –– though that was predicated on the assumption that the county would pass the tax increase. When commissioners approved the budget earlier in the meeting, Commissioner Eloy Aranda expressed appreciation that after “years and years,” the county was finally in a good financial position to pass a balanced budget. It was a difficult blow to see that surplus disappear.

“Quite frankly this is unacceptable. This should not have happened,” Commissioner Buddy Knight said as commissioners learned of the error.

Commissioner Brenda Bentley solemnly added, “But it did, and now we have to deal with the consequences.”

The Texas comptroller’s website explains: “Truth-in-taxation is a concept embodied in the Texas Constitution that requires local taxing units to make taxpayers aware of tax rate proposals and to afford taxpayers the opportunity to roll back or limit tax increases.”

The county is required to offer this transparency by calculating an effective tax rate and a rollback rate. Presidio County Tax Assessor/Collector Natalia Williams explained that the effective rate is a calculation that is “trying to get the same amount of revenue as last year’s tax rate,” rather than drawing in additional new revenue for the county.

The rollback rate, however, levies an eight percent increase. Texas law states that if the county approves a tax rate that exceeds the rollback rate, citizens can petition for an election where they can vote to reject the tax increase. The county had hoped to approve the rollback rate this year, adding over $29,000 in additional tax revenue. Instead, they are stuck at the effective rate.

Concerns were compounded because 2019-2020 was the last chance the county had to levy the full eight percent rollback rate. The state legislature voted this year to limit future rollback rates to three and a half percent, further restricting county tax rates going forward.

Guevara’s solution going forward is to always hold tax rate hearings, “no matter what, just for the sake of transparency. If we ever find ourselves at the 11th hour needing to have had tax hearings then we won’t be in that same predicament anymore.”

In an interview with The Big Bend Sentinel, Commissioner Knight said, “It won’t break us by any means. We’ll be okay, but we’re not going to be in as good of a shape as we could have been.”

He added, “It’s tough for us to provide the services required of us by the state without being able to get every penny we can.”

Knight then spoke about the county’s financial controls, stating, “We needed more staff and we didn’t have it. We got rid of it.”

Knight was referencing the Office of Management and Budget, which used to provide budget oversight for the county. Sanchez, the one who raised concerns about the lack of tax rate hearings to county officials at the Friday meeting, had been the director of the OMB when the department was abolished last year. She has a pending lawsuit against the county and its treasurer, claiming the office’s abolition was politically motivated.