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Property Tax Budget Financing 6.06

Section 6.06 – Appraisal District Budget and Financing

Expenses for operating the appraisal district and appraisal review board are proposed by the chief appraiser not later than June 15 of each year. Statute requires the appraisal district budget be detailed, particularly with regard to cost for labor and benefits. Each proposed position must be listed.

The board of directors can modify the budget and is required to hold public hearings to consider the budget. Final adoption of the annual budget must occur by September 15; the board of directors controls budget decisions. Although the tax entities can veto the budget adopted by the tax appraisal district board of directors, this does not occur often.

Tax entities directly fund the appraisal district’s budget in proportion to their share of the property taxes in the appraisal district. Property owners indirectly fund operation of the appraisal district through payment of property taxes. Tax entities are sensitive to proposed budget increases by appraisal districts.

Sec. 6.06. Appraisal District Budget and Financing.

(a) Each year the chief appraiser shall prepare a proposed budget for the operations of the district for the following tax year and shall submit copies to each taxing unit participating in the district and to the district board of directors before June 15. He shall include in the budget a list showing each proposed position, the proposed salary for the position, all benefits proposed for the position, each proposed capital expenditure, and an estimate of the amount of the budget that will be allocated to each taxing unit. Each taxing unit entitled to vote on the appointment of board members shall maintain a copy of the proposed budget for public inspection at its principal administrative office.

(b) The board of directors shall hold a public hearing to consider the budget. The secretary of the board shall deliver to the presiding officer of the governing body of each taxing unit participating in the district not later than the 10th day before the date of the hearing a written notice of the date, time, and place fixed for the hearing. The board shall complete its hearings, make any amendments to the proposed budget it desires, and finally approve a budget before September 15. If governing bodies of a majority of the taxing units entitled to vote on the appointment of board members adopt resolutions disapproving a budget and file them with the secretary of the board within 30 days after its adoption, the budget does not take effect, and the board shall adopt a new budget within 30 days of the disapproval.

(c) The board may amend the approved budget at any time, but the secretary of the board must deliver a written copy of a proposed amendment to the presiding officer of the governing body of each taxing unit participating in the district not later than the 30th day before the date the board acts on it.

(d) Each taxing unit participating in the district is allocated a portion of the amount of the budget equal to the proportion that the total dollar amount of property taxes imposed in the district by the unit for the tax year in which the budget proposal is prepared bears to the sum of the total dollar amount of property taxes imposed in the district by each participating unit for that year. If a taxing unit participates in two or more districts, only the taxes imposed in a district are used to calculate the unit’s cost allocations in that district. If the number of real property parcels in a taxing unit is less than 5 percent of the total number of real property parcels in the district and the taxing unit imposes in excess of 25 percent of the total amount of the property taxes imposed in the district by all of the participating taxing units for a year, the unit’s allocation may not exceed a percentage of the appraisal district’s budget equal to three times the unit’s percentage of the total number of real property parcels appraised by the district.

(e) Unless the governing body of a unit and the chief appraiser agree to a different method of payment, each taxing unit shall pay its allocation in four equal payments to be made at the end of each calendar quarter, and the first payment shall be made before January 1 of the year in which the budget takes effect. A payment is delinquent if not paid on the date it is due. A delinquent payment incurs a penalty of 5 percent of the amount of the payment and accrues interest at an annual rate of 10 percent. If the budget is amended, any change in the amount of a unit’s allocation is apportioned among the payments remaining.

(f) Payments shall be made to a depository designated by the district board of directors. The district’s funds may be disbursed only by a written check, draft, or order signed by the chairman and secretary of the board or, if authorized by resolution of the board, by the chief appraiser.

(g) If a taxing unit decides not to impose taxes for any tax year, the unit is not liable for any of the costs of operating the district in that year, and those costs are allocated among the other taxing units as if that unit had not imposed taxes in the year used to calculate allocations. However, if that unit has made any payments, it is not entitled to a refund.

(h) If a newly formed taxing unit or a taxing unit that did not impose taxes in the preceding year imposes taxes in any tax year, that unit is allocated a portion of the amount budgeted to operate the district as if it had imposed taxes in the preceding year, except that the amount of taxes the unit imposes in the current year is used to calculate its allocation. Before the amount of taxes to be imposed for the current year is known, the allocation may be based on an estimate to which the district board of directors and the governing body of the unit agree, and the payments made after that amount is known shall be adjusted to reflect the amount imposed. The payments of a newly formed taxing unit that has no source of funds are postponed until the unit has received adequate tax or other revenues.

(i) The fiscal year of an appraisal district is the calendar year unless the governing bodies of three-fourths of the taxing units entitled to vote on the appointment of board members adopt resolutions proposing a different fiscal year and file them with the secretary of the board not more than 12 and not less than eight months before the first day of the fiscal year proposed by the resolutions. If the fiscal year of an appraisal district is changed under this subsection, the chief appraiser shall prepare a proposed budget for the fiscal year as provided by Subsection (a) of this section before the 15th day of the seventh month preceding the first day of the fiscal year established by the change, and the board of directors shall adopt a budget for the fiscal year as provided by Subsection (b) of this section before the 15th day of the fourth month preceding the first day of the fiscal year established by the change. Unless the appraisal district adopts a different method of allocation under Section 6.061 of this code, the allocation of the budget to each taxing unit shall be calculated as provided by Subsection (d) of this section using the amount of property taxes imposed by each participating taxing unit in the most recent tax year preceding the fiscal year established by the change for which the necessary information is available. Each taxing unit shall pay its allocation as provided by Subsection (e) of this section, except that the first payment shall be made before the first day of the fiscal year established by the change and subsequent payments shall be made quarterly. In the year in which a change in the fiscal year occurs, the budget that takes effect on January 1 of that year may be amended as necessary as provided by Subsection (c) of this section in order to accomplish the change in fiscal years.

(j) If the total amount of the payments made or due to be made by the taxing units participating in an appraisal district exceeds the amount actually spent or obligated to be spent during the fiscal year for which the payments were made, the chief appraiser shall credit the excess amount against each taxing unit’s allocated payments for the following year in proportion to the amount of each unit’s budget allocation for the fiscal year for which the payments were made. If a taxing unit that paid its allocated amount is not allocated a portion of the district’s budget for the following fiscal year, the chief appraiser shall refund to the taxing unit its proportionate share of the excess funds not later than the 150th day after the end of the fiscal year for which the payments were made.

Amended by 1981 Tex. Laws (1st C.S.), p. 122, ch. 13, Secs. 17 & 18; Subsection (i) added by 1985 Tex. Laws, p. 2495, ch. 311, Sec. 1; amended by 1989 Tex. Laws, p. 3594, ch. 796, Sec. 9; amended by 1991 Tex. Laws, p. 412, ch. 20, Sec. 16; amended by 1993 Tex. Laws, p. 1526, ch. 347, Sec. 4.07.

Cross References:
Credit to school state funding for appraisal costs, see Sec. 41.097, Education Code.
Governing bodies entitled to vote on board selection, see Sec. 6.03(c).
Changes in method of financing, see Sec. 6.061.
Designation of district depository, see Sec. 6.09.
Disapproval of board actions, other than budget, see Sec. 6.10.

Notes:
An appraisal district, collecting taxes for some of its taxing units, may not include the collection costs in its appraisal budget for all taxing units it serves. The district must allocate collection costs to those taxing units receiving collection services. Op. Tex. Att’y Gen. No. GA-0030 (2003).

An appraisal district board may reimburse legal fees if it is authorized to do so by statute or under common law. No statute expressly authorizes an appraisal district to reimburse its chief appraiser’s legal fees if the chief appraiser is indicted for official misconduct for an alleged failure to carry out a duty of his or her office. However, no statute expressly prohibits the reimbursement of the legal fees in a case where the chief appraiser failed to notify the taxpayer of the determination of a change in use for agricultural land. Under common law, an appraisal district may reimburse the legal expenses if (1) the board determines that paying for the legal representation serves a public interest, not just the interest of the employee or officer, and (2) the board determines that the employee or officer committed the alleged act or omission that was the basis of the suit in good faith and within the scope of his or her official duties. The fact that an employee or officer is no longer serving the appraisal district is irrelevant to the decision to pay the legal fees. The board of directors need not adopt a policy on paying officers’ and employees’ legal expenses before it may agree to pay accrued expenses. Op. Tex. Att’y Gen. No. DM-488 (1998).

A central appraisal district board cannot award bonuses to district employees for work that the employees have already rendered. Article III, Section 53, of the Texas Constitution expressly forbids such actions. Therefore, bonus payments are allowable only for a board-approved compensation plan before employees rendered their services. The appraisal district cannot carry forward funds not expended for a contract into its next budget year but must instead follow the statutory scheme in Tax Code Section 6.06(j), requiring that excess funds be used to proportionally reduce the future year’s allocations owed by the taxing units using the district’s services. Letter Op. Tex. Att’y Gen. No. DM-94-067 (1994).

The Junior College District of Washington County is required to contribute moneys in accordance with the Sec. 6.06 allocation formula to defray costs incurred by the appraisal district becoming operational on Jan. 1, 1982. The college district was empowered to compel the county to assess and collect its taxes for it and was obligated to pay for such services in 1980 and 1981. The county was required to provide such services even though it contracted with the appraisal district for such services. The college district is required to compensate the appraisal district for appraisal district services performed after Jan. 1, 1982 in accordance with Sec. 6.06 unless an alternative allocation formula is adopted pursuant to Sec. 6.061. Op. Tex. Att’y Gen. No. JM-35 (1983).

An appraisal district lacks authority to rescind or waive the penalty and interest imposed by Sec. 6.06(e) upon taxing units delinquent in paying their allocation of the appraisal districts’ expenditures. Op. Tex. Att’y Gen. No. JM-74 (1983).

These codes affect property owners across the state, in both larger and smaller counties including:

  • Denton County
  • Fort Bend County
  • Harris County
  • Dallas County
  • Montgomery County
  • Brazoria County
  • Williamson County
  • Coryell County
  • Erath County
  • Bell County
  • Henderson County
  • Harrison County
  • Hays County
  • Howard County
  • Gregg County
  • Nacogdoches County
  • Moore County

The Texas Property Tax Code applies to all property types in Texas including:

  • Hospital
  • Medical facility
  • Daycare center
  • Supermarket
  • Office warehouse
  • Commercial building
  • Shopping center
  • Student housing
  • Warehouse
  • Department store

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