Lancaster Independent School District is following in the footsteps of nearby Cedar Hill ISD in calling for a tax rate “swap and drop” election. Unfortunately for taxpayers, LISD has been deceptive in its presentation, its promotional literature leaves questions unanswered, and questions to the school board president and superintendent have gone unanswered.
Lancaster ISD is proposing to drop its Interest and Sinking (I&S) fund rate from its current maximum $0.50 to $0.36, while increasing its Maintenance and Operations (M&O) rate from $1.04 to $1.17, making a total tax rate for 2018 of $1.53.
LISD trustees adopted an M&O rate of $1.17 and an I&S rate of $0.50 on July 12. Its ordinance setting a tax rate also promised that, if a Tax Ratification Election is passed on August 25, the I&S rate will be reduced by $0.14, so that after the election, the tax rate will be $1.53 instead of the current $1.54. The pitch to the taxpayers is that if the district raises its M&O rate to $1.17, it will qualify for an additional $2.1 million in outside grants.
On the surface, it looks good to save a penny on the total tax rate in exchange for $2.1 million. But LISD is not being completely transparent and in one case is deliberately deceptive.
The truth is that taxpayers will be voting to give Lancaster ISD the permanent authority to raise its total tax rate from the current $1.54 to $1.67. Actually, Lancaster ISD is in a position to reduce its I&S rate for 2018 without a TRE. According to last year’s debt budget, it only needs around $11 million a year to fund its debt service. With taxable valuation of around $2.6 billion, Lancaster ISD can raise around $13 million in debt taxes. It only needs $11 million, so it could afford to cut the I&S rate by eight cents and still fund its debt payments.
However, LISD plans to reduce its I&S rate by 14 cents, to $0.36. A $0.36 rate will only raise around $9.36 million in debt service taxes. So, the question that Board President Ellen Clark and Superintendent Elijah Granger are not answering is how they are going to make up the approximately $1.4 million in debt service payments. Apparently, they intend to take the difference out of the M&O funds.
That’s what their publicity says. They literally say that they are going to take 14 cents out of the I&S pocket and put 13 cents of it into the M&O pocket. Since neither Clark nor Granger will declare how they will make debt payments in 2018, what they say in their publicity appears to be true. It appears they intend to use M&O taxes to pay debt in the 2018-19 fiscal year.
There is only one problem. In July 2017, Texas Attorney General Ken Paxton said a taxing entity can’t use M&O funds to pay debts.
Cedar Hill ISD has a huge debt reserve fund. It could afford to pay debts from its reserves while cutting its I&S rate by $0.14. Lancaster ISD doesn’t have the reserves to cover the shortfall in I&S collections.
In its publicity, Lancaster ISD implies that the Dallas County Elections Department has worded the ballot incorrectly. While Dallas County’s elections administrator will print the ballot to ask taxpayers whether they will give LISD the authority to tax at the maximum rate of $1.67, LISD’s publicity puts an “X” mark through the number $1.67 and replaces it with the number $1.53. The taxpayers are not informed by LISD’s literature that the $1.53 is for this year only and taxes will rise in future years to pay debts. Taxpayers are not informed about how LISD will make up the shortfall in the I&S fund during the 2018-19 tax year.
LISD has not adopted a budget. It has not even posted a proposed 2018-19 budget. It will not adopt a budget until August 20, only five days before the tax ratification election and 12 days after early voting began.
Early voting in the August 25 election is currently underway. It’s now up to voters to decide if Lancaster ISD’s “swap and drop” is a good deal for taxpayers or a bait and switch.
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