Truth in Millage (TRIM) Process

Kent OlsonDeputy Treasurer-Clerk City of TallahasseeFebruary 7, 2014

Issues to Discuss:• Overview of Truth in Millage (TRIM) • TRIM Calendar• Budget Hearing requirements• Advertisements• TRIM Compliance • Relevant (and often Required) Forms• Maximum Millage and Future Levy Capacity• Value Adjustment Board• Theatrical Demonstration 2

What is Truth in Millage (TRIM)?TRIM is under Florida Statutes 200 - Determination

of MillageSpecifically governed by F. S. 200.065 - Method of

Fixing MillagePurpose is to provide taxpayers transparency in

how local taxing authorities propose and approve millage rates as part of the taxing authorities’ budget adoption process.

Determine whether there is a tax increase proposed (calculate the rolled-back rate) 3

What is the Rolled-back Rate?The millage rate necessary to raise, in the

aggregate, the same amount of money this year from the taxpayers on last year’s tax roll that was raised a year ago (excludes new construction)

Levying a millage rate higher than the rolled-back rate will require the taxing body to advertise a tax increase

4

Truth in Millage (TRIM)Florida Statute Chapter 200

Provides calendar for property tax levy and budget adoption process

Outlines requirements to be in compliance

Department of Revenue (DOR) is responsible for enforcing compliance

5

Key ProcessesTRIM Notice (forms DR-420, DR-420MM-P, DR-

420TIF forms)Budget Ordinance & ResolutionsProper Notices and Advertisements Public Hearings DR-422 (before and after VAB)TRIM Compliance Package

6

TRIM Calendar On or before June 1st - Property Appraiser provides

estimated taxable values to local taxing authorities (not technically part of TRIM)

July 1 – 1st day of calendar – Property Appraiser provides the Preliminary Tax Roll to all taxing bodies on Form DR-420

—This is the basis for levying property taxes in the upcoming year

By day 35 (August 4), taxing bodies must file with the property appraiser and the tax collector the tentative millage rate on form DR-420 as well as forms DR-420TIF and DR-420MM-P

—Also must provide tentative (1st) public hearing date on DR-4207

TRIM Calendar (cont.)Notice of Proposed Taxes is distributed by the

Property Appraiser no later than day 55 (August 24)

Between day 65 (September 3) and day 80 (September 18), taxing authority must hold its first public hearing

Within 15 days of holding the first public hearing, the taxing authority must publish an advertisement to adopt the final millage and budget

8

TRIM Calendar (cont.)Second public hearing must be held between 2 and 5

days after the advertisement has been published

Within 3 days after the second public hearing, taxing authority must file its millage rate ordinance with the property appraiser and the tax collector

9

TRIM Calendar (cont.)End of September or early October - Taxing authorities

receive extended roll taxable values from Property Appraiser (DR-422). Taxing authorities have three days to determine if they will adjust their millage rates administratively

Within 30 days after the second public hearing, taxing authority files certification (DR-487) and required documentation with the Department of Revenue (DOR)

Within 60 days after the second public hearing, the DOR will indicate compliance or non-compliance with the Statute

After completion of Value Adjustment Board hearings, Property Appraiser provides taxing authorities with final taxable values

10

Budget HearingsPer F.S. 200.065, School Boards and Counties have

priority in selecting public hearing dates

School Boards get first priority, Counties are second

No other taxing authority can hold its hearing on the same date as the School Boards or Counties

Hearings start after 5 p.m. (5:01 p.m. at the earliest, for the Department of Revenue)

11

Budget Hearings (cont.)At both hearings, millage rate must be discussed first

before the Budget; increase over the rolled-back rate must be announced

At the first public hearing, the millage rate can be increased from the tentatively adopted millage in July; however, would require a first class mailing to all taxpayers

At the second public hearing, the millage rate cannot be increased from the tentatively adopted millage rate at the first public hearing

12

Budget Hearings (cont.)The general public is allowed to speak before the

governing body can take any action of adoption

The millage must be adopted before the budget can be adopted

No millage can be levied until a resolution or ordinance has been adopted by the taxing authority

13

Public Hearing

14

Budget Hearings (cont.)The following must be publicly announced at the

hearing before the millage can be adopted:Name of the Taxing AuthorityRolled-back ratePercentage of increase over the rolled-back

rate Millage to be levied

15

Ad Publication RequirementsIf the proposed millage rate is greater than the

rolled-back rate, then you must publish a Notice of Tax Increase ad

If the proposed millage rate is less than or equal to the rolled-back rate, then you must publish a Notice of Budget Hearing ad

In either case, a Budget Summary advertisement is required to be published adjacent to the appropriate “Notice” ad

16

Notice of Proposed Tax Increase Ad There are size requirements for the Notice of

Proposed Tax Increase ad—Full 1/4 page—Headline type of 18 point or larger

May not be published in legal or classifiedsDo not deviate from specified language (see

TRIM Manual on DOR website)

17

Notice of Budget Hearing AdNo specific size requirements

May not be published in legal or classifieds

Do not deviate from specified language

18

Budget Summary AdNo size requirementsMust be published adjacent to the appropriate

“Notice” adInclude all budgeted funds, revenues,

expenditures and reserves Group by fund type (General, Special Revenue, etc.) Use major classifications to group revenues and

expenditures Exclude trust, agency, internal service funds as well as

bond proceeds19

Budget Summary Ad (cont.)Basically shows flow of funds including

reserves available, revenues and expenditures, transfers, yielding in effect a “Total Available” and a “Total Appropriated”, including reserves

Must show ad valorem revenue at a level of 95% or greater of the tax levy amount

See Examples in TRIM Manual

20

DOR TRIM Violations/InfractionsDOR keeps track of violations or infractions

annually“Minor” infractions are noted with the letter

the taxing authority receives if the TRIM package is “in compliance”

“Serious” violations and how they may be corrected are included in letter of non-compliance

21

Non-Compliance

22

Non-Compliance If Department of Revenue review indicates

non-compliance with maximum rates• Determination within 30 days of submittal

deadline (30 days after adoption)• Repeat hearing and advertisement process• Notice includes “Previous Notice . . In Violation of

the Law” • Revised millage adopted recertified with State

within 15 days of adoption; not sent to PA or TC23

Non-Compliance Notice LanguageTHE PREVIOUS NOTICE PLACED BY THE (name

of taxing authority) HAS BEEN DETERMINED BY THE DEPARTMENT OF REVENUE TO BE IN VIOLATION OF THE LAW, NECESSITATING THIS SECOND NOTICE.

24

Non-Compliance (cont.)If the Department of Revenue determines

non-compliance is remedied & recertified, no penalty

If compliance is not recertified, penaltyIf non-compliance is not remedied, penaltyPenalty: 12 months of sales tax revenues

25

Non-Compliance CorrectedIf excess taxes are collected, held by tax

collector in trust

Excess may only be used to reduce taxes in subsequent fiscal year

26

Relevant Forms

• DR-420 – Every taxing body completes; the main form in this process• DR-420TIF – for reporting tax increment financing districts information• DR-420MM-P – Preliminary Maximum Millage• DR-420DEBT – Certification of Voted Debt Millage (if applicable)

27

Relevant Forms (cont.)

•DR-420MM – Final Maximum Millage• DR-422 – May be used to Revise Millage, if permitted• DR-487V – Governing Body Vote Record• DR-487 – Used to transmit the millage certification package

28

TRIM Notice FormsForms are inter-related

Complete DR-420TIF first, then DR-420 and DR-420MM-P

Should be completed and presented together for policymakers’ review

29

DR-420Main purpose is to determine the rolled-back rate

and its relationship to the proposed millage rateProperty Appraiser completes property value

information at the top of the formForm is filed with the property appraiser (original

and one copy) and tax collector (one copy)Taxing body completes the remainder of the form

(see example)

30

DR-420 (cont.)Due no later than Thursday, August 4th - 35 days

after start of TRIM process Must obtain DR-420MM-P form from DOR

website – Property Appraiser does not provideCheck the math/data on all forms from the

Property AppraiserComplete package consists of three different

forms (DR-420, DR-420MM-P, DR-420TIF)Request revised DR forms, as necessary

31

32

EXAMPLE – DR-420, p. 1DR420 Fiscal Year 2014 (Tax Levy Year 2013) Utopia Gardens

1. Current Year Tax Value- Real Property 1,178,512,144

2. Current Year Tax Value - Personal Property 42,155,231

3. Current Year Tax Value - Centrally Assessed Property 13,260,287

4. Current Year Gross Taxable - Operating Purposes 1,233,927,662

5. Current Year Net New Taxable Value 12,268,759

6. Current Year Adjusted Taxable Value (line 4 - line 5) 1,221,658,903

7. Prior Year Final Gross Taxable Value (from prior year DR403) 1,257,978,930

8. Does authority include Tax Increment financing areas (if yes, enter number) 1

9. Does the taxing authority levy a voted debt service or millage voted for 2 years or less? If yes, enter number of DR-420DEBT forms attached No

10. Prior Year Operating Millage Levy 7.7564

11. Prior Year Ad Valorem Proceeds (7) x (10) 9,757,388

12. Amount, if any, paid or applied in prior year as result of a TIF district (sum line (6c) or (7a) for all DR420 TIF forms) 836,743

13. Adjusted Prior Year Ad Valorem Proceeds (line 11 - line 12) 8,920,645

33

EXAMPLE – DR-420, p. 214. Dedicated Increment Value (sum of 6b or 7e for all DR420

TIF forms) 122,483,123

15. Adjusted Current Year Taxable Value (line 6 - line 14) 1,099,175,780

16. Current Year Rolled-Back Rate (line 13 divided by line 15) x 1,000 8.1158

17. Current Year Proposed Operating Millage Rate 8.1150

18. Total taxes at proposed millage rate (line 17 x line 4, div. by 1,000) 10,013,323

19. Check Type of Principal Authority Municipality

20. Check Applicable Taxing Authority Principal

21. Is millage levied in more than one county? No

Dependent Special Districts and MSTUs Stop and Sign

22. Total adjusted prior year ad valorem Proceeds of authority, DSDs &MSTUs (Line 13 From all DR420s) 8,920,645

23. Curr. Yr. Agg. Rolled Back Rate (line 22 div. by line 15, mult. by 1,000) 8.1158

24. Curr. Yr. Ag. Rolled Back Taxes (line 4 x line 23) 10,014,310

25. Total Oper. Ad Valorem Taxes (line 18 from all DR420's) 10,013,323

26. Curr. Yr. Prop. Ag. Millage Rate (line 25 divided by line 4, x 1,000) 8.1150

27. Curr. Yr. Proposed Rate – as % Chg. Rolled (line 26 divided by line 23) -1, x100 -0.01%

DR-420TIFProperty Appraiser completes property value

information on the TIF District at top of formProvided at the same time as DR-420 Information from the DR-420TIF is utilized on DR-

420 to help in calculation of the rolled-back rateForm is completed by the taxing authority after

the tentative millage rate is adopted by CouncilForm is filed with the property appraiser (original

and one copy) and tax collector (one copy)Minimal information is completed by taxing body

34

DR-420TIF Example1. Current Year taxable value in the tax increment area

218,057,384

2. Base Year taxable value in the increment area 89,127,7813. Current year tax increment value (line 1 minus line 2) 128,929,6034. Prior year taxable value 195,404,1715. Prior year tax increment value (line 4 minus line 2) 106,276,390

6. a. Enter proportion on which the payment is based 95.00%6. b. Dedicated Increment Value (6a) x (3) 122,483,123

6. c. Amount of Payment to Redevelopment Trust in prior year 836,743

7. If amount to be paid to Trust is not based on a proportionof the tax increment value7 a. Amount of Payment to Redevelopment Trust Last Yr7 b. Prior Year Operating Millage Levy (Form DR420, line 10)7 c. Taxes Levied on Prior (multiply line 5 by 7b, divide by 1000)7 d. Previous Yr Payment as Prop of Taxes Levied (7a/7c)7 e. Dedicated Increment Value (7d) x (1)

35

DR-420MM-PUsed to determine voting levels that will be

required based upon the proposed millage rateForm is completed by the taxing authority after

the tentative millage rate is adopted by Council Form is filed with the property appraiser

(original and one copy) and tax collector (one copy) (see forthcoming example) with DR-420 and DR-420TIF

36

Maximum Millage Rates Per capita personal income added to the

Rolled-back Rate (RBR) only for maximum levy limit calculation purposesNo, Virginia, this is not a second or revised RBR

For advertisement of a tax increase, only RBR counts

Levy limits – majority, 2/3, unanimous

37

Maximum Levy Limits • Majority vote – Rolled-back rate(RBR), plus per capita personal income change • Two-thirds vote – 110% of RBR adjusted for per capita personal income• Unanimous vote (¾ if 9 or more) – up to 10 Mil Cap• Referendum – up to 10 Mil Cap• Super-majority vote is of the membership of the governing body, not the members who are present

38

39

Example - Form DR-420MM-P, p. 1DR-420MM-P for FY14 (Levy Year 2013): Utopia Gardens

1. Has your taxing authority levied ad valorem for < 5 yrs? No

2. Current Year rolled-back rate from Current Year Form DR420, line 16 8.1158

3. Prior Year majority vote maximum rate from 2012 Form DR420MM, line 13 7.9471

4. Prior Year operating millage levy from Current Year Form DR420, line 10 7.7564

If line 4 is equal to or greater than line 3, skip to line 11. If less, continue to line 5.

5. Prior year final gross taxable value from Current Year Form DR420, line 7 1,257,978,903

6. Prior year maximum ad val. proceeds with majority vote (3 x 5 div. by 1,000) 9,997,284

7. Amount paid or applied in prior year to a TIF district (C.Y. Form DR420, line 12) 836,743

8. Adjusted prior year ad val. proceeds with majority vote (line 6 minus line 7) 9,160,541

9. Adjusted current year taxable value from Current Year Form DR420, line 15 1,099,175,780

10. Adjusted current year rolled-back rate (line 8 divided by line 9, x 1000) 8.3340

11. Rolled-back rate to be used for maximum millage calculation (line 10, if adjusted, or line 2) 8.3340

12. Change in per capita Florida personal income 1.0169

13. Majority vote maximum millage rate allowed (line 11 x line 12) 8.4748

40

Example - Form DR-420MM-P, p. 214. Two-thirds vote maximum millage rate allowed (line 13 x 1.10) 9.3222

15. Current year proposed millage rate 8.1150

16. Minimum vote required to levy proposed millage (check one) Majority

17. The selection on line 16 allows a maximum millage rate of:(enter appropriate rate) 8.4748

18. Current Year gross taxable value from Current Year Form DR420, line 4 1,233,927,662

19. Current year proposed taxes (line 15 x line 18, div. by 1000) 10,013,323

20. Total taxes levied at the maximum millage rate(line 17 x line 18, div. by 1000) 10,457,290

21. Current year proposed taxes of all dependent special districts & MSTUs (sum of all lines 19 from each district’s Form DR420MM) 0

22. Total current year proposed taxes (line 19 plus line 21) 10,013,323

23. Taxes at the maximum millage of all dependent special districts & MSTUs 0

(the sum of all lines 20 from each district's Form DR420 MM)

24. Total taxes at maximum millage rate (line 20 plus line 23) 10,457,290

25. Are proposed taxes on line 22 < or = to taxes on line 24? yes

Example – Form DR-420DEBTDR-420DEBT Utopia Beach1. Current Year Tax Value- Real Property 47,454,987,0512. Current Year Tax Value - Personal Property 4,725,173,0493. Current Year Tax Value - Centrally Assessed Property 194,778,9694. Current Year Gross Taxable - Operating Purposes 52,374,939,0695. Current Year proposed voted debt millage rate 0.48526. Current year proposed millage voted for 2 yrs or less 1.0000

41

DR-420MMVery similar to DR-420MM-P

Form is completed by the taxing authority after the Council has adopted the final millage rate at the second budget hearing

Used to verify that the taxing authority adopted a millage rate in accordance with the voting requirements (see example)

42

43

Form DR-420MM, p. 1DR-420 MM for FY 2014 (Levy Year 2013): Utopia Gardens

1. Has your taxing authority levied ad valorem for < 5 yrs? No

2. Current Year rolled-back rate from Current Year Form DR420, line 16 8.1158

3. Prior Year majority vote maximum rate from 2012 Form DR420MM, line 13 7.9471

4. Prior Year operating millage levy from Current Year Form DR420, line 10 7.7564

If line 4 is equal to or greater than line 3, skip to line 11. If less, continue to line 5.

5. Prior year final gross taxable value from Current Year Form DR420, line 7 1,257,978,903

6. Prior year maximum ad val. proceeds with majority vote (3 x 5 div. by 1,000) 9,997,284

7. Amount paid or applied in prior year to a TIF district (Form DR420, line 12) 836,743

8. Adjusted prior year ad val. proceeds with majority vote (line 6 minus line 7) 9,160,541

9. Adjusted current year taxable value from Current Year Form DR420, line 15 1,099,175,780

10. Adjusted current year rolled-back rate (line 8 divided by line 9, x 1000) 8.3340

11. Rolled-back rate to be used for maximum millage calculation (line 10 if adjusted, or line 2) 8.3340

12. Change in per capita Florida personal income 1.0169

13. Majority vote maximum millage rate allowed (line 11 x line 12) 8.4748

44

Form DR-420MM, p. 214. Two-thirds vote maximum millage rate allowed (line 13 x 1.10) 9.3222

15. Current year adopted millage rate 8.1150

16. Minimum vote required to levy proposed millage (check one) Majority

17. The selection on line 16 allows a maximum millage rate of:(enter appropriate rate) 8.4748

18. Current Year gross taxable value from Current Year Form DR420, line 4 1,233,927,662

19. Current year adopted taxes (line 15 x line 18, div. by 1000) 10,013,323

20. Total taxes levied at the maximum millage rate(line 17 x line 18, div. by 1000) 10,457,290

21. Current year adopted taxes of all dependent special districts & MSTUs (sum of all lines 19 from each district’s Form DR420MM) 0

22. Total current year adopted taxes (line 19 plus line 21) 10,013,323

23. Taxes at the maximum millage of all dependent special districts & MSTUs 0

(the sum of all lines 20 from each district's Form DR420 MM)

24. Total taxes at maximum millage rate (line 20 plus line 23) 10,457,290

25. Are adopted taxes on line 22 < or = to taxes on line 24? yes

DR-422Form is prepared by the Property Appraiser once the

Final Taxable Value has been established (October 1)Taxing authority has 3 days to return the form to the

Property AppraiserForm may be used to adjust millage administratively if

the assessed value changes significantly from the July 1 Preliminary Tax Value

Definition of “Significantly”More than 1% for cities, counties, schools and water

management districtsMore than 3% for MSTUs and special districts

45

Example – Form DR-422DR-4221. Current year gross taxable value line 4, DR420 1,233,927,6622. Final current year gross taxable value from Form DR403 1,202,189,756Percentage of change in taxable value (line 2 divided by line 1, minus 1, mult. by 100) -2.6%

4a. County or municipal principal taxing authority millage rate 8.11505. Unadjusted gross ad valorem proceeds (line 1 x line 4a, divided by 1,000) 10,013,3236. Adjusted millage rate (line 5 divided by line 2, mult. by 1,000) 8.3292

46

DR-487VUsed to record the vote of the governing body

on the millage rate at the second budget hearing

Must list each governing body member and show how they voted individually

Form confirms whether the taxing body had the necessary votes to adopt the millage they voted for

47

Example – Form DR-487V

DR-487V

Name Yes No

Not Present or Not Voting

John Dixon XGeorge Fulton XDan Niedermeyer XBill Sherman XViolet Wall X

48

DR-487Used to transmit the TRIM Compliance

package to the State

Due within 30 days of Final Budget hearing (see example)

49

Example Form DR-487DR-487

Check if E-TRIM ParticipantE-TRIM Participants only need to submit items 1-3WITHIN 30 DAYS OF FINAL HEARING send this signed certification with:1. Proof of Publication from newspaper2. Ordinance or Resolution a. Adopting the final millage rate with % change of rolled-back rate shown b. Adopting the final budget, indicating order of adoption3. ENTIRE PAGE from the newspaper a. Budget Summary Advertisement b. Notice of Proposed Tax Increase or Budget Hearing Advertisement c. COUNTIES ONLY: DR-529, Notice - Tax Impact of VAB, within 30 days of completion4. Copy of DR420, with DR420TIF and DR420DEBT, if applicable5. DR-420MM6. DR-487V7. DR-422

50

The Completed Package

51

Levy CapacityLevying less than Maximum Majority Vote

provides additional future capacity – not “use it or lose it”

Maximum majority vote millage rate in following year is based upon the prior year maximum majority vote millage rate

52

Levy Capacity ExamplePrior Year Maximum Millage Rate with majority

vote: 7.9471 (line 3, DR-420MM-P)Prior Year Millage Rate: 7.7564 (line 4, DR-

420MM-P)While RBR will be calculated starting with the

7.7564 millage, the Maximum that can be levied by majority vote will begin with the “maximum millage” RBR based upon the 7.9471

Levying less than the maximum rate will create future capacity for the majority vote maximum

53

Value Adjustment Board Consists of five members: two from the county board of

commissioners, one from the school board, and one citizen each appointed by these two boards

County appointee must be a homestead property owner

School district appointee must own commercial property

Adjudicates all appeals of assessed value filed by taxpayers that are not resolved with the property appraiser

54

Value Adjustment Board (cont.)Costs are shared 60% by the county, 40% by the school

districtIn theory, VAB hearings are to be completed before

October 1 of each year (in time for DR-422 to be distributed with final values)

Serious backlogs have developed within the last few years, resulting in reductions in assessed value well after the tax bills are sent out

55

Additional ResourcesFlorida Statutes, Chapter 200Online Sunshine (www.state.leg.fl.us)DOR – TRIM and maximum millage (

http://dor.myflorida.com/dor/property/trim/trimmax.html)

DOR – TRIM Compliance Manual (http://dor.myflorida.com/dor/property/trim/)

56

57

A Call for Aspiring ThespiansNeed 10 Volunteers:

Finance DirectorCity ManagerMayorCommissioners (4)Newspaper Ad SalespersonCitizens (2)