Public school districts seeking tax increases that offset state compression increased homestead exemptions

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Several school districts across the state are seeking voter approval for property tax rates to offset property tax reforms enacted by the Texas legislature.

Because the school district’s maintenance and operations taxes make up the majority of property tax bills, state legislatures have taken several measures in recent years to ease the burden on property owners while maintaining school district revenues.

Last years state budget included using excess funds to buy off a portion of M&O taxes, a process known as “compression,” and in the third special session lawmakers approved one Increasing the Home Ownership Exemption for school districts from $25,000 to $40,000.

Now state senator Paul Bettencourt (R-Houston) has warned some school districts are seeking increases that will offset relief measures envisaged by the legislature approved by voters.

“Although the state is buying down M&O tax rates statewide, individual school districts could absorb this reduced rate,” Bettencourt said in a statement.

West of Houston, the Katy Independent School District (ISD) is asking voters to approve a tax rate identical to last year’s at $1.3517 per $100 of a property’s appraised value. However, rising property values ​​will raise taxes for property owners above the 2.5 percent cap set by Texas law, and thus the district must obtain voter approval to maintain the tax rate.

Even if voters reject the $1.3517 rate motion, the district will increase its revenue by $42 million. But if the proposal goes through, Katy ISD will be paid an additional $23 million for a total increase in sales of $65.3 million.

It also means homeowners have to pay more instead of benefiting from a tax break from state compression and the increased homeowner’s allowance. According to Bettencourt, the owner of an average $301,000 home pays an additional $141.17 more in property taxes.

Katy ISD Trustees approved a budget that increases spending for fiscal 2022-23 by 9 percent, approximately $18 million above projected revenue. Trustees say they expect enrollment to increase by about 5 percent, despite the student population stayed flat this year at 88,368. The district says the tax hike will bring a pay rise for teachers and staff.

Fort Bend ISD also seeks to offset the reduction implemented through state tax breaks and will ask voters to approve a tax rate of $1.2101 per $100 of valuation. This will bring in an additional $47.66 million for the district, but the owner of an average $301,000 home will pay $220.03 in taxes.

The district says the increase will fix a $47 million budget deficit, provide pay rises for teachers and provide funds for safety measures. The state provides a school safety allocation of $9.72 per student and authorized an emergency budget transfer of $100.5 million for school safety measures last June.

School districts across the state have also received federal primary and secondary school emergency assistance (ESSER) funding for recovery from the COVID-19 lockdowns. Katy ISD was awarded $102.4 million and Fort Bend ISD $94 million.

Beaumont ISD, east of Houston, is also seeking voter approval for a increase in the tax rate of more than 10 percent, increasing property taxes by $88.08 on a $301,000 home.

While Bettencourt notes that there is currently no central database compiling a list of school districts holding tax ratification elections this year, many other districts across the state are hoping to increase revenue and property taxes with TRE and bond elections. Pflugerville ISD near Austin is asking voters to approve both a tax hike and a bond package totaling $367.6 million.

Three weeks before the November 8 election, the Texas Bond Review Board will publish a list of districts conducting bond elections this year.

“In a year of record increases in tax assessments, a November Tax Ratification (TRE) election is a really bad deal for taxpayers if it passes,” Bettencourt said.

State Assemblyman Brian Harrison (R-Midlothian) has called on officials in his district to do so Introduce tax rates without new revenueand noted that some homeowners are selling their homes “because they can no longer afford the taxes and inflation has only made their pain worse.”

Bettencourt says he’s sounding the alarm because taxpayers should be fully informed of what these TREs mean.

“This was not the spirit, intent, or expectation of passing a property tax break when counties plan to increase property tax bills by hundreds of dollars,” Bettencourt said.

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