School districts across Texas are in the process of setting budgets for the next school year. Many districts are also looking to raise property taxes to pay for budgeted spending increases — but they need voter approval.
Several school boards in the Dallas-Fort Worth Metroplex are asking for increases in their districts’ maintenance and operations (M&O) tax rate for 2018. Any proposed M&O tax rate above $1.04 per $100 of assessed property value triggers a Tax Ratification Election (TRE).
The maximum M&O rate allowed by state law is $1.17 for most districts, and that’s the rate most districts are asking local voters to approve. Any rate increases will be on top of skyrocketing property values.
District officials are relying on local taxpayers to generate as much revenue as possible to fund their schools’ operating budgets. Salaries for teachers and staff consume the largest percentage of districts’ M&O budgets, which also include day-to-day expenses such as utilities, transportation, and supplies.
Debt service on outstanding bonds is paid for with separate funds generated by the interest and sinking (I&S) component of school taxes. The maximum allowed I&S rate is $0.50, yielding a total school property tax rate limit of $1.67.
Below are eight Metroplex-area school districts proposing M&O tax rate increases for 2018 (property taxes are paid in arrears) to finance increased spending in 2018-19 and beyond. Rates are per $100 of assessed property value net of any taxable-value exemptions allowed by the district. All are asking for the maximum $1.17 M&O rate. Six are holding their tax rate elections on non-uniform special election dates, when voter turnout is lower and the cost to taxpayers is higher.
Current Rate: $1.33
Proposed Rate: $1.33
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $2.5 million
TRE Date: September 8
District Website: www.azleisd.net
Cedar Hill ISD
Current Rate: $1.51
Proposed Rate: $1.50
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $5 million
TRE Date: September 8
District Website: https://www.chisd.net/Page/11526
Notes: CHISD is billing its TRE as a “Swap-ortunity” or “swap and drop” in which the 13-cent M&O rate increase is offset by a 14-cent I&S decrease, dropping the total tax rate for 2018 by a penny. If TRE voters elect to maximize the district’s operating tax rate this year via a swap, the district is free to increase the debt service rate by 17 cents, upping district taxpayers’ total property tax rate to $1.67.
Dallas ISD
Current Rate: $1.28
Proposed Rate: $1.41
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: n/a
TRE Date: November 6 (general election)
District Website (April Proposal): https://thehub.dallasisd.org/2018/04/12/trustees-briefed-on-tax-ratification-election-proposal/
Notes: DISD trustees are expected to approve a 13-cent rate increase at their August 23 board meeting, triggering a TRE. The past two years, the board failed to approve the rate hike by one vote. But Trustee Justin Henry, who ousted longtime District 9 Trustee Bernadette Nutall in last month’s local runoff race, supports the increase. Nutall did not. In June, the board approved a budget for 2018-19 that includes $1.5 billion in spending on operations; $32 million earmarked for pay increases is dependent on voters’ approval of the rate hike in a November TRE.
Duncanville ISD
Current Rate: $1.52
Proposed Rate: $1.52
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $5 million
TRE Date: September 8 (Early voting August 22-September 4)
District Website: https://www.duncanvilleisd.org/pennyswap
Notes: DISD’s “Penny Swap” would increase the M&O rate by 13 cents and lower the I&S rate by 13 cents, leaving the overall tax rate at $1.52. District officials say they would use the additional revenue to pay for increased security, technology upgrades, and new buses.
Ennis ISD
Current Rate: $1.54
Proposed Rate: $1.54
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $800,000
TRE Date: September 8 (Early voting August 22-September 4)
District Website: https://www.ennis.k12.tx.us/tre
Notes: EISD says “the main reason for the TRE is to maximize the District’s funding from the state. Otherwise, we will be leaving money on the table.”
Current Rate: $1.52
Proposed Rate: $1.51
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $19 million
TRE Date: September 8 (Early voting August 22-September 4)
District Website: https://www.kellerisd.net/swapdrop
Notes: Another “swap and drop” plan in which KISD’s 13-cent M&O rate increase would be offset by an I&S rate decrease of 14 cents, lowering the total tax rate by a penny for 2018. If voters approve the swap and drop to maximize the operating rate, the district is free to raise the debt service rate by 16 cents, up to a maximum total rate of $1.67.
Current Rate: $1.54
Proposed Rate: $1.53
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $2 million
TRE Date: August 25 (Early voting starts August 8)
District Website: https://www.lancasterisd.org/apps/pages/index.jsp?uREC_ID=1209721&type=d&pREC_ID=1446189
Notes: Yet another “swap and drop” in which a 13-cent M&O increase would be offset by a 14-cent I&S decrease, dropping the total tax rate for 2018 by a penny. If LISD voters approve the swap and drop to maximize the operating rate this year, the district is free to raise the debt service rate back to its current 50-cent level without voter approval, upping taxpayers’ total tax rate to $1.67. District officials set a non-uniform August 25 election date and are using “rolling polling” (mobile voting stations at various school campuses) during early voting, which starts August 8 – one day after teachers and staff return to work.
Current Rate: $1.39
Proposed Rate: $1.52
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $25 million
TRE Date: November 6 (revised from September 4)
District Website: https://www.risd.org/tre2018/
Notes: RISD has maintained an M&O tax rate of $1.04 since 2008. The proposed nine-percent increase would raise the average homeowner’s property tax bill by $296, to $3,467 a year. If voters approve the rate hike, an additional $5.8 million collected from local taxpayers will be lost to recapture under the state’s Chapter 41 Wealth Equalization program, also known as “Robin Hood,” and redistributed to other districts. If the TRE fails, the district says it will not be able to fund salary increases and may implement a hiring freeze.
At least 35 districts in the DFW area are currently at the maximum allowable M&O tax rate of $1.17, according to county tax records: Aledo, Anna, Aubrey, Blue Ridge, Burleson, Carrollton-Farmers Branch, Castleberry, Community, Coppell, Crowley, DeSoto, Eagle Mountain-Saginaw, Everman, Farmersville, Ferris, Grand Prairie, Gunter, Irving, Kennedale, Krum, Lake Dallas, Lake Worth, Leonard, Little Elm, Lovejoy, McKinney, Melissa, Pilot Point, Plano, Princeton, Prosper, Royce City, Sanger, Trenton, and Wylie.
Even with flat tax rates, rising property values will result in increased tax revenue for the school districts, and higher property tax bills for taxpayers.
Texas Scorecard will be reporting in more detail on individual districts’ TREs and budgets in the coming weeks and invites comments from local taxpayers.
UPDATED July 18 to add information on Azle ISD’s TRE and note Richardson ISD’s revised TRE date.
UPDATED July 25 to add information on Lancaster ISD’s TRE.
UPDATED July 31 to add information on Ennis ISD’s TRE.
