Four years after lawmakers put school districts on notice that they would need voter approval for tax hikes, just three out of 10 districts have pulled the lever and sought a higher tax rate – despite the financial pinch gripping many districts.
An estimated 224 districts – a little over a fifth of the 1,025 in the state – have won voter approval to raise their tax rates by as much as 13 cents per $100 valuation. Seventy-eight districts have been turned down by their voters, including 17 that have lost twice, according to www .TexasISD.com, which tracks tax rate elections in the state.
That means more than 800 districts are at or below the maximum tax rate that can be levied without going to the voters – $1.04 per $100 valuation. On a home valued at $200,000 for tax purposes, that equals an annual tax of $2,080 – not including the additional local levy for school construction bonds.
So there's little doubt the new requirement – adopted by lawmakers in 2006 – has had a chilling effect on school tax rates, just as some legislative leaders predicted when it was approved. At a time when superintendents across the state are warning about their looming financial plight, and some are warning of a possible lawsuit against the state, Dallas and most other districts in the metropolitan area have declined to schedule elections.
Three districts that tried to raise their tax rates – Cedar Hill, Duncanville and Kaufman – were turned down by voters. Lake Dallas, Prosper and Wylie were successful.
Two other districts – Coppell and Lewisville – will hold elections on Saturday and Tuesday, respectively. Coppell is seeking the maximum 13-cent increase, while Lewisville is seeking a 2-cent hike.
"I'm surprised at the small number holding tax rate elections, because we've always felt people were willing to pay higher taxes for the things they care about, and people in Texas care about their children's schools more than anything else," said Dick Lavine of the Center for Public Policy Priorities, a nonprofit research and advocacy group for low- and moderate-income Texans.
"There's no doubt school districts are being squeezed financially. Eventually most are going to have to try [a tax election] because they are running out of options," Lavine said. "Many have drained their reserve funds and scrubbed their budgets as much as they can."
Joe Smith, former superintendent of the Hudson school district in Lufkin and founder of TexasISD.com, said the reluctance to call an election to increase taxes is widespread.
"They're afraid of it, especially with the economic environment we have now," he said. "They see a TRE as a very formidable task. But the pressure is getting more and more intense. It's a choice most will have to make – either cut staff and programs, or do a tax rate election."
A higher standard
For decades, local school boards could raise property tax rates just by voting on it. But now, school boards live in a different world.
As part of a massive school finance law passed by the Legislature in 2006, school districts for the first time were put under a mandate that required voter approval for tax rate hikes. Generally, districts can now levy up to $1.04 for maintenance and operations, but exceeding that level requires an election. The maximum tax rate that can be sought is $1.17.
Senate Education Committee Chairwoman Florence Shapiro, R-Plano, said she applauds the decision of so many school districts to hold the line on property taxes four years after the Legislature cut the maximum school property tax rate by a third. That decision was forced by the Texas Supreme Court, which ordered the creation of a school funding system less reliant on local property taxes.
"We have a long way to go to get out of this recession, and a lot of soul-searching to do about how to spend taxpayer money," she said. "Now is not the time to raise taxes. It is time to save and better utilize every dollar we've got."
Her House counterpart, Rep. Rob Eissler, R-The Woodlands, maintained that the requirement for voter approval of tax increases is working.
"The good part of having a tax rate election is that it is not a slam-dunk for school districts," said Eissler, chairman of the House Public Education Committee. "They have to think twice about having an election and first do everything they can to hold down costs."
Lavine noted that other local governments are under much less stringent requirements for boosting their tax rates. For example, cities and counties can raise property taxes up to 8 percent a year and not worry about a tax rate election.
"It's unreasonable to hold school districts to this standard," he said. "If voters think school boards are raising taxes too high, they can vote them out of office. That was the way it worked for many years, and it would still work."
Mixed results
The track record for the state's largest districts is mixed.
Arlington, Dallas, Fort Worth and Houston have not gone to their voters. El Paso and San Antonio lost their tax rate elections, while Austin and Corpus Christi won voter approval to raise rates.
David Anderson, a lobbyist for school districts and former director of curriculum at the Texas Education Agency, said superintendents and school boards hoping the Legislature will help them out financially next year and spare them from holding a tax rate election will probably be disappointed.
"One of the first things legislators will say to local school officials is: 'Have you accessed all the pennies [in the tax rate] available to you right now?' " Anderson said. "The reaction from many legislators will be: 'Why come here for more money when you haven't accessed all the local tax revenue available to you?' It's a no-win situation for school districts."
Anderson said lawmakers also will be asking whether districts have been using their reserve funds to offset their revenue shortfalls, much as the Legislature is expected to do next year when it faces a revenue deficit of at least $18 billion.
It's enough, said Anderson and others, to make some districts wish they had held tax rate elections back in 2006-07, when four out of five were successful.
Tax rate hikes during that period were partially concealed because the Legislature decreased the maximum school tax rate over two years and replaced the revenue with higher taxes on businesses and cigarettes.
Sep 8, 2010
