For most other local government entities—ACC, the health district, the county, cities and MUDs—a drop in taxable values means a commensurate drop in tax revenues, assuming the entity does not raise its tax rate to cover the difference.
School districts operate differently. When overall property values go up, a school district’s per pupil operations revenue stays essentially the same. Nearly all of the increase goes into the state Treasury. When overall property values go down, per pupil operations revenue stays essentially the same and the state either makes up the difference or, in Austin’s case, reduces our recapture (Robin Hood) payment.
With lawmakers unlikely to change the school finance system significantly this session, school districts essentially know how much they will have to spend per pupil for the next three years.
Barring any legislative action, the only way school districts can increase net per pupil revenue is to call for an election to raise the property tax rate. Austin ISD Trustees are considering this now.
However, the part of the tax rate that pays interest on school bonds is tied closely to local property values. Austin ISD will need to consider increasing its local property tax rate by up to three cents per $100 of appraised value to pay for existing, taxpayer-approved school and technology bonds. Other districts may need to do the same.
Illustration courtesy of Adria Richards.
