City facing challenge in ratifying tax rate

A new challenge has emerged for the City of Clarendon, which is currently operating without a functioning Board of Aldermen, and this time it’s a question of taxation and whether the city will be able to ratify its tax rate in order to get bills sent out on time.

This is typically the time of year that municipalities and other local governments deliberate and set their ad valorem property tax rates for the coming year, but Clarendon has been without a Board of Aldermen since June when three of its members resigned, leaving the city board unable to get a quorum.

The Donley Appraisal District says state law prescribes that if the city does not adopt a new tax rate, the current tax rate or the effective tax rate – whichever is lower – is automatically adopted for the coming year. In Clarendon’s case, that would be the current rate of 65 cents per $100 valuation, the same rate that’s been in effect since 2008.

But DAD officials say the problem lies in the fact that the tax rate still must be ratified by the Board of Aldermen, and City Hall says it needs to have a supermajority vote (four aldermen in favor) to make that happen.

City Secretary Machiel Covey says a holdover provision in the Texas Constitution stipulates that a city councilperson who resigns or otherwise vacates their seat shall continue to serve in that capacity until their successor is elected or appointed.

Given that, the city reached out to two of the board members who resigned and called a special meeting for Monday night, September 16, with the only agenda item being the ratification of the city’s tax rate. But a few hours before the meeting, the city was informed that one of the resigned members would be unable to attend, and the meeting was canceled.

Covey says the city has already posted an agenda in hopes of having a meeting next Monday and, if necessary, will likely post agendas for meetings everyday through October 5 until a quorum can be obtained and the tax rate ratified. If this effort fails, it will be after the November 5 special election before a new Board of Aldermen will be able to ratify the rate.

DAD Chief Appraiser Paula Lowrie says the city’s delay will cause a lot of problems for her office and for the taxpayers. Combined tax notices for all local entities are usually sent out in October, but a city tax ratified in November would have to billed out separately, causing confusion for taxpayers, extra cost for the city, and the creation of two separate tax rolls for her office to keep up with for an entire year.

“It puts us in an odd position,” Lowrie said. “The whole purpose of having an appraisal district is to combine efforts and do all of this at once.”

City taxpayers would also likely miss out on the discount they receive for paying taxes in October or November.

Waiting until November to ratify the tax rate will also mean financial uncertainty for the city, which is accustomed to receiving 45 percent of its property tax revenue in October. The city has a $132,000 bond payment due February 1, and Covey says she may have to dip into the city’s reserves to pay that or risk damaging the city’s credit rating.