In a year when inflation has averaged 8.3 percent, a school district in Central Texas is asking voters to approve a tax increase anticipated to generate 35 percent more revenue than last year.
Lower Rate, Higher Taxes
Leander Independent School District, which covers parts of Travis and Williamson counties, has adopted a maintenance and operations (M&O) tax rate projected to generate $385 million in revenue for the current school year. Last year, the district collected around $280 million for its operating budget.
The adopted tax rate of $1.2746 per $100 of property valuation is composed of a $0.9446 M&O tax and a $0.33 tax for debt service on outstanding bonds, which total $2.493 billion in principal and interest. This overall tax rate is expected to generate $136 million in revenue for bond payments, bringing the total tax levy to $521 million for 2022. The district collected nearly $431 million in combined taxes last year.
The new adopted rate is $0.0624 lower than last year’s, but it’s significantly higher than the no-new-revenue rate of $1.071278. Property values in the district increased 27 percent from January 2021 to January of this year, so any reduction in the tax rate that isn’t equal to or greater than that percentage is effectively a tax increase.
Election Required
The state allows school districts to increase their tax levy by a certain amount each year, and the corresponding tax rate varies from one district to another depending on changes in property values. If a district’s board wants to raise taxes beyond that amount, they must seek voter approval.
This year, the Leander ISD board adopted a tax rate 9 cents higher than the voter approval rate of $1.1846, so the district is required to hold a voter-approval tax rate election (VATRE). If the higher rate is rejected, the board indicated they would adopt the voter approval rate, which would produce $484 million in total revenue for the district.
State law requires school districts to disclose the amount by which M&O revenue would increase from the previous year if the proposed tax rate is approved. The ballot language for Proposition B reads:
“Ratifying the ad valorem tax rate of $1.2746 in Leander Independent School District for the current year, a rate that will result in an increase of 35 percent in maintenance and operations tax revenue for the district for the current year as compared to the preceding year, which is an additional $99,041,063.”
Selling The Idea
The district’s webpage explaining the proposition reminds voters that the overall tax rate is lower than the previous year, and a note about state funding and recapture payments is included. Specifically, administrators explain that anticipated funding from the state is lower than last year, and for the first time in eight years, Leander ISD will be subject to the requirements of the state’s wealth redistribution program known as “Robin Hood.” According to the district’s budget for the 2022-23 school year, anticipated funding from the state is between $44 million and $46 million—down from $71 million last year—and recapture payments are estimated at $26 million to $36 million.
Leander ISD claims that approval of the proposed tax rate will result in a net funding increase of $32 million for the current school year (compared to revenue generated from implementation of the lower voter approval rate), whereas the district will experience a $35 million budget deficit if voters reject the proposed tax rate.
The board already approved pay raises for teachers and staff earlier this year and does not plan to make any changes to the budget regardless of the outcome of the election, but voters are warned that teaching positions could be reduced in the future if the proposed tax rate is not approved.
Challenge
Once highly regarded for its academic excellence, Leander ISD has suffered a hit to its reputation in recent years.
Since the forced shutdowns at the start of the pandemic in March 2020, school board meetings have seen parents and community members express concerns about the district’s controversial COVID-19 policies, promotion of divisive racial and sexual ideology, and curricula requiring students to read sexually explicit books. In November 2021, LISD taxpayers voted down two proposed bonds totaling $739 million while narrowly approving another for $33 million. At the start of the current school year, the district had 80 vacancies for teaching positions despite offering a starting salary of $53,520, an increase of 5 percent from the previous year.
If voters approve the tax rate adopted by the school board, the average homeowner in the district will pay $5,392 in taxes, $453 more than last year.
Leander ISD is also holding an attendance credit election (ACE) to approve the required recapture payments to the state, and five of the seven school board seats are on the ballot.
Early voting ends November 4, and Election Day is November 8.
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