The summer of 2015 was a tricky one for Texas school officials – whether elected or employed -- involved in building a school budget.
• In much of Texas, including Kilgore, the drop in oil and gas values was severely impacting property tax revenues – mineral values were down and oil field service companies were moving their taxable property elsewhere.
• On June 1, the governor signed a bill requiring Texas school districts which offered a local homestead exemption to make a decision: keep the exemption, decrease it or rescind it by July 1. Kilgore ISD was at the time one of a couple hundred Texas districts offering a local tax exemption– a big one, 20 percent of a homestead’s value, here.
• Looming on the 2015 horizon was a November ballot measure – sure to pass – which would increase the mandatory statewide homestead tax exemption to $25,000 from the $15,000 then in place. It also said – the point that forced the quick decision – that any local exemption in place at the time the measure was passed, presumably the November ballot measure, would have to be continued.
School boards and administrators were looking at a significant drop in resources, tightening a lot of belts.
Over the course of a week at the end of June, Kilgore school board met twice. In the first of those, they discussed the new “keep it or cut it” rule, considering it in the context of the sure-thing statewide exemption and the declining tax roll. At the second, they eliminated the local 20 percent exemption. That vote generated about $660,000 in tax revenue for the district – but it cost local homestead owners that same $660,000, a 20 percent bump in their school tax bill.
About two dozen other Texas school districts made that same decision.
After some conversation, the district took that new money and set it aside – holding it in escrow – waiting to see how the state would react to the change.
In March of this year, the state reacted. The Texas Attorney General opined that Kilgore – and the other districts where trustees made the same decision – erred in eliminating the local exemption. Kilgore ISD publicly noted the opinion was “just an opinion” and, supported by the district’s lawyers, noted that the local exemption was eliminated well in advance of the November election. Legislation could not be retroactive, the district said – they would await “good guidance” before amending the new homestead exemption policy.
In June, two months ago and while that $660,000 still sat in a savings account, a letter signed by both the attorney general and state commissioner of education again noted that the district should not have eliminated the local exemption.
Again, KISD noted that the opinion was still just an opinion written by the Attorney General’s opinion committee and then went a step further: they voted to spend that $660,000 as part of the 2016-17 budget.
We weren’t happy about the original decision to eliminate the exemption… it hit our wallets, too… but we, like other voters, were free to salve that unhappiness when those school trustees run for re-election.
But we’re really disappointed the board has decided two letters from the Office of the Attorney General, with an endorsement from the Texas Education Agency, do not represent “good guidance.”
If some taxpayer, or taxpayers, dip into their checking accounts to sue the district, the district will dip into its pot of taxpayer money to hire lawyers and defend itself against those same taxpayers. And if the district loses that suit, the school will have to come up with enough money to refund that $660,000. If they lose five years from now, the district will have to refund five years worth of $660,000 and that will hurt.
The board felt it was doing the right thing in eliminating the exemption and they felt like they were looking after the students and the educational process when they voted last month to spend the proceeds of that decision. But the state of Texas disagrees.
It’s time the school board and administrators accept that the attorney general’s opinion is, in fact, pretty good guidance; give that $660,000 back to the homeowners and reinstate the local exemption; recognize that sometimes tax rolls go up and sometimes they go down, and build a budget accordingly.