The voter-approval tax rate is a calculated maximum rate allowed by law without voter approval. The calculation splits the voter-approval tax rate into two separate components - a no-new-revenue maintenance and operations (M&O) rate and a debt service rate.
35 M&O includes such things as salaries, utilities and day-to-day operations. Debt service covers the interest and principal on bonds and other debt secured by property tax revenues.
36 The voter-approval tax rate is the sum of no-new-revenue M&O and debt service rates, plus the unused increment rate (if applicable).
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In most cases, the voter-approval tax rate exceeds the no-new-revenue tax rate, but occasionally decreases in a taxing unit's debt service will cause the no-new-revenue tax rate to be higher than the voter-approval tax rate.
Additional Sales Tax Rate
Cities, counties and hospital districts may levy a sales tax specifically to reduce property taxes. 61 In which case, the taxing unit reduces its no-new-revenue rate and voter-approval tax rates to offset the expected sales tax revenue. 62
De Minimis Rate
The de minimis rate is a new tax rate calculation designed to give smaller taxing units, including cities with a population of less than 30,000, some relief from the three and a half percent voter-approval rate. The de minimis rate is the sum of a taxing unit’s no-new-revenue maintenance and operations rate; the rate that, when applied to a taxing unit’s current total value, will impose an amount of taxes equal to $500,000; and a taxing unit’s current debt rate. 90
Voters may petition to hold a tax approval election if the de minimis rate exceeds the voter-approval rate and the adopted rate is equal to or lower than the de minimis rate but higher thatn the voter-approval rate. 91 The voter-approval rate in this instance may be calculated in one of two ways, depending on the qualifications of the taxing unit. These voter-approval calculations are either:
- (a) a three and half percent increase to maintenance and operations plus the unused increment plus debt or
- (b) if a city were also a special taxing unit with an eight percent rate increase to maintenance and operations and debt.