Buried in the clutter of my desk is a bill for all my property taxes for the coming year.
The number I have underlined shows I’ll pay $400 less in Waco Independent School District taxes.
The estimate assumes that Texas voters on Tuesday will approve property tax exemption measures as part of the 17 state constitutional amendments on the ballot.
I think it’s a safe assumption. Turning down a tax cut in your favor is like arguing with Santa Claus.
It’s not just me but almost every homeowner in McLennan County in line for a big school tax cut. That’s true even in China Spring ISD, which has a voter-approved tax rate election Tuesday. Same goes for Midway ISD, which has a bond election.
Proposition 13 would raise the usual homestead exemption from $100,000 to $140,000. Proposition 11 would raise the exemption to $200,000 for 65 and older. Breaks like those will zero out school tax bills for some homeowners in the Waco area.
(You might counter that rising tax appraisals could erase those savings, but on average they won’t, with countywide home values only up 1% countywide this year.)
So if there’s no such thing as a free lunch, who’s footing the bill?
The state of Texas is set to offset the exemptions to the tune of $51 billion in the next two-year cycle. But the question is how long that can last.
Banking on a surplus
I talked about this earlier this month with state Rep. Pat Curry, R-Waco, on “Friday Forum with The Waco Bridge,” the weekly local affairs radio show I cohost on KWBU-FM 103.3.
Curry was in the bipartisan majority that voted to put tax relief on the ballot and he still supports all 17 amendments.
Curry said the state of Texas has a big surplus due to sales tax revenue, oil and gas money and other fruits of economic development. That money has to be spent under the Texas Constitution once the Rainy Day Fund of nearly $30 billion is full, Curry said.
In addition to property tax relief, the surplus also allows spending on other items in the constitutional amendment election, including money for water and an $850 million endowment for Texas State Technical College.
“We’ve been very blessed that we have a situation where we’ve had a surplus for many years,” Curry said. “We have a great, growing economy … and the Waco-McLennan County area has one of the highest growth rates when it comes to business and economic development, so that helps tremendously. The issue is how sustainable it is.
“So, when we have a shortfall, we won’t be able to spend it on some of those things, and property tax relief is one of those things. … It’s very difficult to sustain things like that. We’ve got huge long-term needs as well. One of the constitutional amendments is a billion dollars a year on water, and that’s not a tenth of what we’re going to need.”
So where does that leave school districts in an economic downturn?
Curry said the base level of state aid to public schools is protected. But if the state can’t keep up with offsetting the property tax savings, schools might have to call more tax elections.
“They have to go to the voters to do it,” he said. “It’s no different than us going to voters to do things we want to do, right? And I think that’s a good thing.”
Schools stretched thin
I get a different take from local school superintendents in the throes of tax elections.
Marc Faulkner of China Spring ISD and Chris Allen of Midway both say the elections are trying to fill a growing gap in state funding. The state’s “basic allotment” – the funding that schools depend on for general educational needs – was raised by $55 this year to $6,215 per student, after six years with no increases.
The Legislature did add $8.5 billion this biennium to public education, but mostly targeted to specific needs, such as salaries of experienced teachers.
I was a little surprised to hear the superintendents of these seemingly prosperous suburban districts talk about deficits and deferred maintenance. Their boards can’t just vote to raise the tax rate, since that would mean less state aid.
In a “Friday Forum” interview that aired Oct. 2, Allen told me that while state funding stagnated, inflation skyrocketed and buildings and climate control systems aged.
“You add that to the fact that schools have consistently been underfunded by the state of Texas, and then we don’t have the M&O budget to keep up with day-in-day-out expenses, much less take care of components about to (degrade),” he said. “It’s untenable from a financial point of view.”
Faulkner, the China Spring superintendent, told me in an interview for “Friday Forum” on Aug. 23 that measures the Legislature passed in 2019 have made it difficult to support the district’s needs through property taxes.
“In all honesty, the biggest problem is we’re just a rooftop community,” he said. “We are just counting on rooftops for taxpayers to fund the school district. It makes it difficult to keep up.”
Midway’s $83.5 million bond election addresses needs at current facilities rather than building new ones. Because of strong tax base growth and low debt load, its tax rate would remain steady at 93.7 cents per $100 valuation.
China Spring is seeking a Voter Approved Tax Rate Election to raise $2.1 million to avoid teacher layoffs and program reductions.. A yes vote on VATRE reduces the tax rate from $1.02 per $100 to 98 cents, while a no vote reduces it to 92.2 cents.
Faulkner said that if the VATRE passes, a typical home with a market value of $400,000 would see a tax decrease of $110.
I asked China Spring officials what would happen to that same home if the homestead exemption is raised by another $40,000 under Prop 13. They calculate taxes would drop by $502.
And that points to a unique opportunity for Texas school districts like Midway and China Spring. They may complain that lawmakers this session prioritized school tax relief over school funding. But if want to ask voters for more money, it’s an easier sell in a rare year when school taxes are going down. See you at the polls.
J.B. Smith
Editor-in-chief, The Waco Bridge
