PART 6:
Rollback Elections
Taxing Units Other than School Districts
If a taxing unit – other than a school district – adopted a tax rate that exceeds the rollback rate, voters in the unit may petition for an election on the tax increase. A successful election limits the unit's current rate to the rollback rate.
The Texas Supreme Court decision in Vinson v. Burgess has established that county tax rates are subject to rollback elections, reversing earlier lower court and attorney general's decisions. The attorney general has ruled that rollback elections are constitutional for hospital districts (Opinion No. JM-859 in 1988). The Supreme Court decision appears to establish that rollback elections are constitutional for other taxing units as well.
Water Code Section 49.236 states that the water district will follow the rollback election procedures in Tax Code Section 26.07(b)-(g). Those procedures are listed below.
STEP 1:
Petition for an election.
The rollback process starts after the taxing unit formally adopts the tax rate. If the adopted rate exceeds the rollback rate, voters may start the petition drive.
A petition must meet specific requirements. A petition must state that it is intended to require an election to reduce the tax rate for the current year. If the tax rate adopted for the current year by the taxing unit imposes taxes for maintenance and operation (M&O) of $5 million or more, seven percent of the registered voters shown on the most recent official voter list must sign the petition. If the tax rate adopted by a taxing unit imposes taxes for M&O of less than $5 million, the signatures of 10 percent of the registered voters in that unit are required on a petition. Signatures collected by a paid person are valid.
Voters must submit the petition to the taxing unit's governing body within 90 days of the tax rate adoption. A sample petition appears in Appendix 14. Petition signatures are also discussed on that page.
STEP 2:
Determine if the petition is valid.
The taxing unit's governing body must determine if the petition is valid and pass a resolution regarding its validity within 20 days of receiving it. If the governing body takes no action within that time, the petition is automatically valid.
The Comptroller's office recommends that if the governing body finds the petition invalid, the resolution or order setting it aside should specify the reasons why it is invalid.
STEP 3:
Hold elections, if necessary.
If the governing body for a taxing unit determines the rollback petition is valid, the governing body must set a rollback election date. This date cannot be earlier than 30 days or later than 90 days after the last date the governing body could have ruled on the validity of the petition.
Election Code Section 41.001 requiring local elections to be held on a specified date does not apply to this election unless a specified date falls within the permitted 30 to 90 days. More information about election dates may be obtained from the Election Division of the Secretary of State's Office at (800) 252-8683.
Tax Code Section 26.07 specifies the wording for a rollback election ballot. A sample ballot appears in Appendix 14. Section 26.085 addresses the election to limit dedication of school funds to a junior college.
STEP 4:
Act on election results.
If the rollback election passes, a taxing unit must reduce its tax rate for the current year to the rollback rate. If the rollback fails, the unit's adopted tax rate stands. A simple majority is necessary for passing the rollback election.
STEP 5:
Send out new bills and refund taxes paid under original rates.
If a rollback election passes, the adopted tax rate is reduced by law to the rollback rate. The unit's assessor must prepare and mail new tax bills. The taxing unit's delinquency date is postponed by the number of days between the date original bills were mailed and the date the corrected bills were mailed.
If the taxing unit has begun collecting taxes at the time of the election, some taxpayers will have paid taxes under the original rate. The unit must refund the difference between the taxes levied under the original rate and taxes levied under the rollback rate. The taxing unit has 60 days from the date the election results are counted to send refunds.
Small refunds. A taxing unit sends refunds resulting from a rollback election if the refund amount is $1 or more. If the amount is less than $1, the unit shall refund the difference upon the taxpayer's request. The taxpayer must apply for the refund of less than $1 within 90 days after the date the refund becomes due or forfeits the refund right. The refund becomes due on the date the election results are counted. This refund requirement is specified in Tax Code Section 26.07. School districts are under Section 26.08 for rollback elections and, therefore, do not fall under this provision on rollback election refunds.
Interest after 60 days. After 60 days, units must pay interest on refunds. The interest is 1 percent per month, or part of a month, from the date that the election results were certified to the date the refund is mailed.