Aledo ISD Chief Financial Officer Earl Husfeld presented information stemming from House Bill 3, which he said will most likely drop the maintenance and operations side of the tax rate from $1.17 to $1.068 this next fiscal year.
“The M&O portion of our tax rate will decrease for the 2019-20 school year. As [the board] knows, in House Bill 3 they essentially brought down the tax rate — in other words, they’re putting in additional money to replace the local revenues that are being lost by compressing the tax rate,” Husfeld said. “I don’t want the community to think we can cut our budget to withstand that, but essentially the state is buying down the tax rate.”
The question was, how long would this last.
“Some individuals and organizations are hesitant after the two-year cycle, so how long the state can have the financial resources to sustain this tax compression. They went through tax compression in 2005-2006, so at one time the M&O rate was $1.50 and then it got compressed to $1.37, and then it got compressed to $1.04 over a period of time and the state said they would make up the difference, which was about $5 billion infusion of money,” Husfeld said. “Then in 2011 is when the state cut public education about $5 billion, so some are a little concerned if this is the same song, different verse. So long term, we will have to see how it plays out.”
The M&O rate provides funds for maintenance and operation, like salaries, tools, equipment and transportation. The other component, the interest and sinking rate, provides funds to repay debt that finances a district’s facilities.
But AISD Board Secretary Forrest Collins said they can’t be afraid about things changing in two years.
“The biggest thing for me is everything lasts for two years, but we can’t be afraid of that, so we need to utilize our resources to the best of our ability and not always be afraid that everything is going to change in two years,” Collins said. “It might, but that’s just no way to run a business or run a school district.”
House Bill 3 included $5.1 billion to lower school district taxes and, according to a Texas Tribune article, lawmakers estimate the bill would lower tax rates by an average of 8 cents per $100 valuation in 2020 and 13 cents in 2021, which would mean a tax cut of $200 for the owner of a $250,000 home in 2020 and $325 in 2021.
AISD Superintendent Dr. Susan K. Bohn said they are grateful for what the legislature has done.
“We are grateful though that the legislature delivered on its promise to be able to fund, at least for now, more money into public ed and at the same time a tax rate reduction. I would like to be positive that they will take care of this long term,” Bohn said. “Our current tax rate is $1.595 and our tax rate for next year will be $1.4933 — that’s the I&S plus M&O together — so based on the 2018 average taxable home value, which was $290,165, this tax rate decrease would result in a $295 savings for some of these at that average value.”