Tax Relief

Heads of State promise the tax breaks won’t have an effect on faculty budgets | Texas

AUSTIN – In Texas, public schools pay much of their activities by collecting property taxes. Nonetheless, state officials promise that the districts will not feel the weight of the reduced funding despite the property tax relief bill touted by the legislature, which reduces what districts can collect.

Senate Law 1 was swiftly passed in the Legislature’s third special session this fall, after Governor Greg Abbott put it on the agenda. Its purpose is to give homeowners tax breaks by increasing the homestead exemption from $ 25,000 to $ 40,000.

For the average homeowner whose property is valued at $ 300,000, that translates into about $ 176 temporary tax break over the next year, said Senator Paul Bettencourt, R-Houston, who led the bill.

The bill has yet to be approved by voters, but if it gets a majority in May, homeowners will keep more of their money and the state will pay the bill by using $ 2 billion in excess government funds in the first year to replace what would otherwise be collected from the school districts.

“This should not adversely affect the ability of school districts or schools to fund their education in the future,” said Rod Bordelon, senior fellow and policy director at Remember the Taxpayer.

Remember, the taxpayer is a campaign run by the Texas Public Policy Foundation, whose policy proposals were used as the basis for drafting the bill.

While a surplus is not guaranteed every year, Bordelon said, if the state maintains its conservative approach to budgeting, it will continue to have enough excess money for the initiative, and perhaps even cut school maintenance and operations taxes to $ 0 over 20 years .

Bordelon said this is possible because Texas, even taking inflation and population growth into account, is projected to see overall revenue growth of 9% year-over-year, while total spending and budget needs are expected to grow 5% to 6% year-over-year. The estimated net surplus of around 3% to 4% could be used to further reduce property taxes, he said.

“Assuming these trends persist over a long period of time, you could use that excess, or a significant portion of that excess, and buy property taxes in the local communities in about 20 years,” said Bordelon.

The bill also sets limits on the powers of school districts to adopt tax rates.

Under the bill, districts are not allowed to accept an aggregate tax rate – including M&O and interest and declining rates – that exceeds the district’s voter approval rate for the 2022 tax year. The M&O budget pays for general operations, while the I&S is used to repay debts stemming from the issuance of bonds. State law would also limit the school districts I&S rate to $ 0.50 per $ 100 valuation.

The Texan legislature continues to reduce the funding dependency of school districts on property tax. In 2019, lawmakers passed House Bill 3, a comprehensive school funding law that compresses the district’s ability to set tax rates and secure funding for higher teacher salaries.

In 2021 it was addressed again by HB 1525, which adjusted different contingents of HB 3 and enabled the use of compensatory educational resources for socio-emotional learning, teaching trainers and attendance officers. It also prohibits cuts in teachers’ salaries from 2019-20.

“[Parents] shouldn’t worry as this tax break has no impact on the school district [ability] to work effectively, ”said Bettencourt. “The state has not only increased funding for this issue, but has also ensured that school districts achieve high-quality results for their children.”

Texas school district officials also said the change doesn’t worry them when it comes to maintaining a balanced budget while maintaining the quality of education.

“We pride ourselves on conservative financial management and making the most of our limited resources to help all of the children in Huntsville ISD,” said HISD Superintendent Scott Shepard. “We are confident that with the adoption of SB 1 we can maintain a balanced budget, which we have done for the last four consecutive years.”

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