Analysis: The taxes Texas school districts are afraid to cut
A state law that's supposed to keep a leash on school tax increases might be preventing temporary tax breaks in the Texas districts with the highest tax rates. But reversing it could make it easier to raise taxes.
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It’s hard to tell the tax hawks from the tax doves sometimes. A legislative proposal meant to make it easier for school districts to grant temporary tax rate cuts was derailed this week by opponents who say it would also allow districts to raise taxes without voter approval.
It would do both things — and either of them would probably make property taxpayers happy.
Currently, school districts with tax rates of $1.04 or more can’t raise their rates without voter permission. They also cannot temporarily lower their rates without holding another vote when it’s time to return to the original higher rate.
Several lawmakers in the Texas House and Senate have proposed allowing a school district that’s already got a tax rate above $1.04 to lower its rate temporarily without having to hold a new election to raise it back to the original rate. If they could do that, taxpayers would be more likely to get those temporary cuts.
A district with a rate of $1.15, for instance, would be allowed to cut the rate to $1.10 for a year and then return to $1.15 without going to voters for permission. The logic is that voters had to approve the original rise to $1.15, so there’s no need to ask them again.
“I can’t keep it at the lower [tax] rate, but from time to time, I’d like to be able to save them money.”— Missy Bender, president, Plano ISD board
House Bill 486, sponsored by state Rep. Gary VanDeaver, R-New Boston, made it to the full House but was swatted down by his colleagues on a technicality. He has time to fix it and send it back to them. The Senate is poised to consider identical legislation next week.
State Rep. Jeff Leach, R-Plano, is the one who called the foul on VanDeaver. With some amendments, Leach said, he might be persuaded to support VanDeaver’s legislation.
Leach’s home school district — Plano ISD — is a prime example of the districts in question, and his taxpayers could be among the proposed legislation’s beneficiaries.
PISD voters overwhelmingly approved a $481 million bond package in May 2016. Among other things, that money gives the district temporary budget relief, according to School Board President Missy Bender — enough to cut spending by $15.6 million and to cut $7.7 million from the district’s “Robin Hood” payment to the state this year.
But the district expects it will need to revert to its current tax rate pretty quickly. Under current law, it could cut the tax rate now — by about 3.8 cents, Bender says — but would have to hold an election to return to the current rate later. Alternatively, the district can leave things be, keep charging taxpayers the higher current rate and save the unspent proceeds for a future rainy day.
“I can’t keep it at the lower rate, but from time to time, I’d like to be able to save them money,” Bender said of the district’s property taxpayers.
Roughly a third of Texas school districts — 438 — had maintenance and operations tax rates above $1.04 in 2016, according to the Texas Education Agency. Most of those — 329 — had moved their rates all the way up to $1.17, the highest rate allowed under normal circumstances.
The current law encourages districts to leave the tax rate alone, Bender says — to skip the temporary cut and bank the money. That avoids the district’s risk and expense of a future election. Supporters of current law contend the districts should lower rates whenever they have the opportunity and shouldn’t raise them under any circumstances without voter approval.
Under the proposal stalled in the House this week but still alive in the Senate, her district would be able to lower its rate by 3.8 cents now and return — without a new vote — to its current rate later on. Supporters of changing existing law, a group that includes Plano and most of the state’s other school districts, argue taxpayers who’ve once approved a tax rate shouldn’t be asked to approve it all over again after a temporary tax cut.
The cuts in question would probably not be huge — Plano could save its average homeowner about $113 with a 3.8-cent cut this year, Bender says. But any cuts would probably be welcome; taxpayers only rarely get these temporary reprieves under current law.
“Boards are hesitant to lower the rate when they are able to do so because they would have to hold another election to return to the rate that voters had already approved,” state Rep. Donna Howard, D-Austin, told the House Ways & Means Committee at a hearing last month. Howard, who sponsored legislation identical to VanDeaver’s and made the opening argument for both of them, said any tax rate increase would be one that had previously been approved by voters.
As the districts read it, this is a choice between temporary tax cuts and no cuts at all. As the defenders of current law see it, the decisions over rising tax rates ought to be in the hands of voters and not school boards.
But only one side is dangling a tax cut.
More columns from Ross Ramsey:
- Another federal judge has ruled that Texas legislators intentionally discriminated on the basis of race when changing voting and election laws. But even if the laws change back, the state still got away with it.
- A state that wants to grow by freeing growing economic engines from regulations and taxes is throttling its cities and school districts with regulations and taxes.
- The state has a Rainy Day Fund with billions of dollars in it, but Texas lawmakers would rather use accounting tricks to balance their next budget.
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