Much has been made of how much or how little the disannexed property owners will pay in property taxes if an election for the disannexation of a large portion of the Village of Salado is successful on May 6.
But what about those who are left behind?
They could see their property taxes increase to at least $1.01 per $100 evaluation, or more, in order to fund a $1 million operating budget and retire the debt service of the $8.2 million in bonds approved by the board of aldermen.
The left behind residents and property owners could face the daunting task — if petition circulator John Newman has his way — of funding the entire $525,000 annual debt service for the $10.55 million bond issue that was approved by voters in the entire Village of Salado in November 2014.
If faced with funding the entire bill for the sewer bond, the debt service tax for those left behind in Salado could increase to $0.6069 per $100 evaluation, based upon the property value estimate provided to Salado Village Voice by the Bell County Tax Appraisal District (BellCAD).
The 2016 certified total freeze adjusted value for the Village of Salado is $168,130,780. Marvin Hahn, chief appraiser of BellCAD, stated that the certified total freeze adjusted value for the Disannexation Area outlined in the petition is $81,638,646.
Based on current values, the total freeze adjusted value for the remaining area of Salado is $86,492,316. At this value, the debt service tax rate to retire the $525,000 annual payment for the sewer bond would be increased to $0.6069 per $100 evaluation in the next budget cycle.
Citing section 43.148 of the Local Government Code, Newman says that the disannexed properties would be due refunds of those taxes for the bond debt because the sewer is of “no direct benefit” to the area. Therefore, Newman states that the disannexed properties would not be liable for the sewer debt.
Newman is at odds with statements by Village attorney Alan Bojorquez that the disannexed area will be responsible for the pro rata share of the municipal bond debt if disannexation passes in May.
If Newman is wrong, and the disannexation area remains responsible for the pro rata share of the debt, the disannexed area will be responsible for about 48.55 percent of the debt service, or $254,887.50 of the annual payment. The area left behind by the disannexation would be responsible for $270,112.50 of the annual debt payment.
Property taxes for maintenance and operation could also double to a rate of $0.40 per $100 valuation with the exit of such a large portion of the Village. The current budget calls for $350,200 in M&O property tax revenues.
To generate that level of revenue in 2017-18 would require an increase of more than 20 cents in the property tax rate for the much smaller remainder of Salado.
Here’s where things get very complicated for those who could be left behind by disannexation. Next year’s rollback rate will be determined on the amount of money generated by this year’s tax base.
The Tax Appraisal District will not calculate the rollback rate until it certifies the property values in July.
The Salado left behind by disannexation will also face the loss of another sizeable source of revenue: franchise and sales taxes.
The Village receives approximately $176,600 in franchise fees. Most of this is from $116,600 in electric franchise fees. Another $30,500 in phone franchise fees, $20,000 in water franchise fees and $9,500 in cable franchise fees are paid to the village.
The Village, at this time, cannot anticipate just how much it will lose in franchise revenues due to the disannexation, but it could lose more than half of those revenues.
This situation could be made tougher by the fact that only one candidate of the seven vying for three positions on the board of aldermen lives in the area left behind.
All of the aldermen and the mayor live in the area proposed for disannexation. If the disannexation is successful, one of two things could happen:
• A special election is called for the November election date.
• An emergency special election is called for by the Governor for a date earlier than November. If this happens, the earliest that an emergency election could be held would be the end of August or early in September.
The Village deadline for adopting a 2017-18 budget is the end of September.
Shortly after being inducted into office as the new aldermen of the left behind Village of Salado, they would be faced with either slashing hundreds of thousands of dollars from a budget that they have had no influence in making or increasing the tax rate to more than $1.00 per $100.
Yet after leaving them in this situation, proponents of disannexation state call it retribution for those who are left behind to withdraw the protection of the ETJ from them.
after a vote to disannex.