Can the Houston ISD (and other local districts Cypress-Fairbanks and Spring Branch ISDs) continue to play Santa Claus to local property-owning voters?
It appears that HISD wants to. In a press release advancing tonight's meeting, the district noted that it plans to continue the local property tax homestead exemption it grants — lost money which is not reimbursed by the state of Texas. For a school district that frequently complains it is short of funds, that is generous indeed.
The HISD press release states:
“The legislature raised the state’s homestead exemption from $15,000 to $25,000 through Senate Bill 1, which is subject to voter approval in November. In addition to the state’s exemption, HISD will continue offering the local homestead exemption. Through this local exemption, HISD homeowners take an additional 20 percent off the appraised value of their property, the highest homestead exemption allowed by the state.
“Last year, the local homestead exemption saved HISD homeowners more than $134 million in property taxes. That is an additional annual savings of about $667 for the owner of a $278,637 home, which is the average home value in HISD.”
Not everyone is applauding this largesse. Attorney Buck Wood, general counsel to the Equity Center (a school finance research and advocacy organization established by a group of 55 school districts " as a response to the gross inequities in our state’s school finance system") says it makes no sense, particularly when part of Senate Bill 1 says that any local homestead exemption passed for the 2015-2016 school year will be locked in for the next five years – and Wood actually believes it'll be longer than that because there's nothing to stop legislators from extending that period.
“This is all over politics,” Wood said by phone from Austin. This session's legislators raised the state homestead exemption by $10,000 from $15,000 to $25,000 so they could reduce taxes for property owners throughout the state. Then they were afraid some school districts might drop their local exemptions by the same amount, he says.
About 200 Texas school districts add on a local homestead exemption – the difference being that while the state has to cover its own mandated exemption, providing each school district funds, it doesn't have to do anything about making up for what local districts give away on their own.
“The Texas Supreme Court has said if the state mandates then the state has to make up the money,” Wood says.
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SHOW ME HOW
The reason the five-year freeze was added in (and originally it was ten years) was that legislators were afraid local boards would negate the tax break the state was handing out by dropping its own exemption by an equal amount.
Wood believes that if districts act quickly, they can discard the local exemption before the new law takes effect (if aproved by voters) in November. He concedes that not all legislators share his assessment.
“I always felt like [a local homestead exemption] was dangerous for districts to adopt because they're politically hard to get rid of,” says Wood who didn't seem real hopeful that local school district trustees would want to risk the wrath of voters by voting to add to their taxes.
Not betting that HISD trustees will want to fight that battle either.