What is a Tax Note?
There was an “announcement” by Judge Mills via Commissioner Laubach of the County seeking a Tax Note on December 14, 2020, for $13,000,000 to build the courthouse. We, the Everyday Citizens of Aransas County, voiced our disapproval of a $17,235,000 general bond for the same purpose on Election Day.
A Tax Note, also known as an Anticipation Note, is governed by Government Code Chapter 1431 of the Texas Statutes. A Tax Note does not require an election as general bonds or have a clause for a petition as in a Certificate of Obligation.
In general, the proceeds of a Tax Note issued by a County can be used for a myriad of purposes to include: contractual obligations for construction of public works, purchase materials for improvements, professional services, operating expenses, budget deficits, etc. The one thing specifically stated which may not be done with a tax note is to repay any borrowing within the 24 months prior to the date of the order.
Tax Notes are secured by revenue, taxes, a combination of both and/or proceeds or reimbursements of funds from FEMA or another state or federal agency.
A Tax note typically has a maturity date before the seventh anniversary of the date the Attorney General approves the Note. If the Note is issued under Section 1431.015 (Emergency Financing), the Note must mature before the tenth anniversary. Tax Notes are an instrument a governing body can use to pay for construction, renovation, improvements, acquisition of materials, contracting professional services and financing budget deficits. The biggest advantage of a Tax Note for a governing body is there is no requirement for an election by the Citizens of the jurisdiction.