Analysis: Why rising property values don’t lower school taxes

by Ross Ramsey, The Texas Tribune
Dec. 14, 2016


When your property values rise, your school property tax rates are supposed to fall, right?
That might be how you want it to work, but it’s not the way school finance actually works in Texas.
Over the past decade, the Legislature has sopped up the benefits of rising property values to pad the state budget, forcing school districts to forgo cuts in property tax rates to make up the difference. All the while, legislators have made political hay of rising property tax bills, blaming the local districts that now pay a good chunk of the state’s share for public schools.
Taxable school property values rose 67.2 percent from 2005 to 2014, from $1.22 trillion to $2.03 trillion, according to the state’s Legislative Budget Board and the comptroller of public accounts. Some of that was growth — new houses and buildings and whatnot — and part of it was demand for what was already here.
Over the past couple of decades, with a single exception, taxable school property values in Texas have risen every year. It quickly rebounded from a small property value decline in 2004. No news there. It’s a boom state, a Texas Miracle — whatever you want to call a period of steady growth and success.
But steadily rising Texas property values haven’t translated into what could have been a steady drop in school property tax rates. In fact, school tax bills have shot up over a decade when much more modest increases were required — largely because state lawmakers decided the benefits of rising values should go into the state’s budget instead of taxpayer pockets.
A few have proposed fixing the other end of the school finance seesaw by barring the state from sweeping up the benefits of rising property values to balance its own budget. State Sen. Kirk Watson, D-Austin, has re-filed legislation that would bar the state from lowering its spending when property values rise. In 2015, that idea never got a committee hearing. Other lawmakers have proposed requiring the state to pay at least half the costs of public education.Taxpayers are mad about it. State officials, sensitive to taxpayer anger, have proposed reining in school boards and other local governments — city councils, county commissions, hospital districts and the like — by forcing them to go to voters whenever they raise taxes more than 4 percent in a single year.
School finance is complicated enough to give a regular human a headache, but this part of it is simple. The state pays part, the federal government pays part and the local government pays the rest. The local government’s piece comes from property taxes. If property values are low, tax rates have to be relatively high. If values rise, the rates can drop.
The owner of a $200,000 property with a tax rate of $1 per $100 of value would pay $2,000 in taxes. To raise the same $2,000 in taxes on a $250,000 house, the rate would only have to be $.80 per $100.
But tax rates in Texas have tended to stay up even as property taxes rose — even as overall spending per student remained relatively flat.
The culprit — that would be the state — is evident in the numbers. In 2008, the state took responsibility for 44.9 percent of the total cost, or about as much as the local districts spent. Now, the locals are paying 51.5 percent to the state’s 38.4 percent.
State legislators took advantage of rising property values to avoid raising state taxes — shrinking the state’s share and forcing property-tax-dependent local schools to keep rates high to make up the difference. State spending on a per-student basis is lower than it was 10 years ago, while local spending has risen to make up the difference and also to cover relatively small increases in overall spending.
The alternatives might be unpleasant — raising state taxes on purchases and other things to offset cuts in property taxes. Lawmakers have done that before, but they nearly always renege on promises to hold up their end of the deal. After they reworked business franchise and other taxes and lowered property taxes in 2006, the state and local shares of school expenses were about equal.
When property taxes rose, state budget writers didn’t adjust, shifting the load to local taxpayers. And now, those legislators are blaming the locals for all that extra weight.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2016/12/14/analysis-why-rising-property-values-dont-lower-sch/
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Analysis: The state’s declining support for public education in Texas

by Ross Ramsey, The Texas Tribune
Dec. 12, 2016

School property taxes are rising as local school costs increase, while the state gradually decreases its share of public education spending.

At the same time, according to the outgoing chairman of the Texas House’s Public Education Committee, the Legislature is spending more than $2 billion a year that would have gone to public education on other programs and services in the state budget.
State Rep. Jimmie Don Aycock, the Killeen Republican who chairs the House Public Education committee, told a group of school officials from around the state last week that voters want school taxes to go to schools. He suggested the Legislature’s practice in recent years — gradually shifting its share of school funding to local governments that rely on rising property taxes — will eventually come home to roost, especially if those school officials tell their voters about the problem.
Maybe. Had the state kept its share of school funding constant for the past 10 years, voters might not be griping about rising property taxes.
The state of Texas will spend a projected $40.5 billion on public education during the current 2016-17 budget period, and when state officials tell you they’re spending more on education, they’re telling the truth.
Not all of the truth, but some of it. Their spending increases haven’t kept up with the burgeoning number of students. In the 2017 fiscal year, the state is planning to spend $19.6 billion, according to the Legislative Budget Board, up 7.4 percent from the amount they spent 10 years earlier.
The average daily attendance in 2017, one way to measure the number of students in public schools, will reach 5.04 million, an increase of 16.8 percent over the 4.3 million in Texas classrooms 10 years earlier.
This isn’t a brainteaser: The population has been rising faster than state spending. Texas is spending more, but not keeping pace.
Local and federal spending increases have covered the difference. Public school districts are on track to spend $26.2 billion in 2017, up 44.2 percent from 2008. Federal spending rose 22.2 percent to $5.1 billion.
On a per-student basis, local spending rose $990.21 over those 10 years, state spending fell $339 and federal spending rose $45.06.
The state is spending more than it was overall, but it’s spending less per pupil.
Some of that is attributable to pure good fortune. The state has done well, economically speaking, and growth in property values — both from new development and rising prices — has boosted property tax bases all over Texas.
That made it relatively easy for property-tax dependent school districts and local governments to grow with the economy, and for the state government to divert money it would have spent on schools to other areas. State officials offloaded one of their biggest financial problems and one of their biggest potential political problems at the same time.
Try this exercise. Don’t fool with the overall cost of public education in each of those 10 years — leave that number alone — but keep the state’s overall share of 44.9 percent in place the whole time. State government would have spent $18.6 billion more than it did on public education over the past 10 years. Local school districts paid 44.8 percent of the total in 2008 and are on track to carry 51.5 percent in 2017. Had the burdens remained constant, local school districts would have spent $11.6 billion less over that decade.
For the second session in a row, state Rep. Donna Howard, D-Austin, has pre-filed a proposed constitutional amendment that would require the state to keep its share of public school spending at 50 percent or higher.
Pinch yourself — that would cut $10.3 billion from what the school districts and their property taxpayers are spending in the current budget, but it would cost the state government — fueled by sales and other taxes — the same amount. That’s back-of-the-envelope math, but you get the idea.
If the state agreed, as Howard has proposed, to cover even more of the cost of public education local schools could spend less. They’d be able to lower property taxes by a sizeable, politically significant amount. Legislators would be on the hook for education support they have been foisting off on local school boards.
It’s an accountability thing. School boards set property taxes and get the blame for it — even when those increases are forced by the Legislature’s steadily declining financial support for public education.
Legislators, on the other hand, have an easy political ride: They get to stand with the voters who want lower property taxes, pretending the local officials are the ones at fault.
Who’d want to give up a political deal like that one?

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2016/12/12/analysis-states-declining-support-public-education/.

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School Funding Challenges in Texas - What can I do?

This year, SBISD estimates our taxpayers will write checks totaling an additional $29 million in taxes. At the same time, the district anticipates a recapture (Robin Hood) payment of $66 million this year, or nearly 17 percent of your locally generated tax revenue. That means a taxpayer who owns a home valued at $500,000 will pay $889 in recapture to the State.


DOWNLOAD A COPY OF THE 2016 TAX LETTER


Recapture dollars go into the State’s public education fund, freeing up state dollars for spending elsewhere.

Effectively, the legislature uses your tax dollars to reduce the amount it would otherwise contribute to public education from other sources. Conversely, while local taxpayers will pay $305 million to SBISD this year, SBISD will receive only $17.5 million in State funding.

Yes, you read that correctly – in essence, SBISD will send three times more funds to the state this year ($66 million) than it will receive in state funding ($17.5 million).

We feel it is misleading for local taxpayers to write checks to our local school district when the majority of the funds attributable to value growth actually benefit the bottom line of the State’s budget. Next year, SBISD is forecast to pay $91 million in recapture. That’s nearly 22 percent of locally generated revenue, and it’s unsustainable.

The Texas Supreme Court ruled earlier this year that while the state’s school finance system meets minimum constitutional requirements, it has “immense room for improvement.” The Court stated that Texas schoolchildren deserve “transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid.”

SBISD agrees the Legislature must fix the school finance system, which puts SBISD at a competitive disadvantage relative to surrounding districts. We need reform that reverses the increasing flow of local taxpayer dollars to the State budget.

Our SBISD taxpayers continue to have the second lowest tax burden of any school district in the area. SBISD is one of only nine area districts that offers the 20 percent Local Option Homestead Exemption. To schedule a presentation for your school, faith community or organization contact us at: schoolfinance@springbranchisd.com



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SBISD to Send $66 Million in Recapture This Year

This year, SBISD estimates our taxpayers will write checks totaling an additional $29 million in taxes. At the same time, the district anticipates a recapture (Robin Hood) payment of $66 million this year, or nearly 17 percent of your locally generated tax revenue. That means a taxpayer who owns a home valued at $500,000 will pay $889 in recapture to the State.


CLICK HERE TO DOWNLOAD A COPY OF THE 2016 TAX LETTER


Recapture dollars go into the State’s public education fund, freeing up state dollars for spending elsewhere.

Effectively, the legislature uses your tax dollars to reduce the amount it would otherwise contribute to public education from other sources. Conversely, while local taxpayers will pay $305 million to SBISD this year, SBISD will receive only $17.5 million in State funding.

Yes, you read that correctly – in essence, SBISD will send three times more funds to the state this year ($66 million) than it will receive in state funding ($17.5 million).

We feel it is misleading for local taxpayers to write checks to our local school district when the majority of the funds attributable to value growth actually benefit the bottom line of the State’s budget. Next year, SBISD is forecast to pay $91 million in recapture. That’s nearly 22 percent of locally generated revenue, and it’s unsustainable.

The Texas Supreme Court ruled earlier this year that while the state’s school finance system meets minimum constitutional requirements, it has “immense room for improvement.” The Court stated that Texas schoolchildren deserve “transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid.”

SBISD agrees the Legislature must fix the school finance system, which puts SBISD at a competitive disadvantage relative to surrounding districts. We need reform that reverses the increasing flow of local taxpayer dollars to the State budget.

Our SBISD taxpayers continue to have the second lowest tax burden of any school district in the area. SBISD is one of only nine area districts that offers the 20 percent Local Option Homestead Exemption. To schedule a presentation for your school, faith community or organization contact us at: schoolfinance@springbranchisd.com



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Texas Supreme Court Upholds School Funding System

The Texas Supreme Court on Friday (May 13) issued a ruling upholding the state’s public school funding system as constitutional, while also urging state lawmakers to implement "transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid." 
But without a court order directing the Legislature to fix specific provisions in the system, school groups worry that lawmakers will either do nothing or something outside the box.  
“Our Byzantine school funding ‘system’ is undeniably imperfect, with immense room for improvement. But it satisfies minimum constitutional requirements,” Justice Don Willettwrote in the court’s 100-page opinion, which asserts that the court’s “lenient standard of review in this policy-laden area counsels modesty.”
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Texas School Finance Ruling Could Come Any Day Now

The state’s high court is expected to rule any day now on a lawsuit filed by those districts, which could force Texas lawmakers into a special session next summer. The hope is that the high court’s ruling will prompt lawmakers to overhaul the system as early as June 2016.
“School funding formulas in Texas are at least 30 years old,” said J. David Thompson, Houston-based attorney for the moderate-wealth districts, such as Dallas and Fort Worth. “Some of our formulas were determined when Ronald Reagan was president and before the fall of the Berlin Wall.”




Read more here: http://www.star-telegram.com/news/local/community/fort-worth/article41510790.html#storylink=cpy
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A Letter to Taxpayers & Video Message - 2015



Click here to download a PDF version of this letter.




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