Breckenridge Texan

Change to BISD tax rate structure could bring in more revenue without raising taxes

June 20
09:18 2018

If voters approve a proposal by the local school board, the Breckenridge Independent School District could receive additional funds without having to raise taxes.

The situation is a little complicated, but BISD Superintendent Tim Seymore has tried to simplify it and there will be an opportunity for community members to get more information at a public meeting to discuss the tax rate on July 9.

The school district is eligible for additional funds from the State of Texas – which could add as much as $270,000 to the BISD coffers – but only if the BISD Maintenance and Operations tax rate is at least $1.17, according to Seymore. The current BISD M&O is $1.04. However, when it is combined with the school district’s Interest and Sinking tax, the total school tax rate that local property owners pay is almost $1.17 ($1.1685) per $100 property valuation.

The M&O funds pay for the district’s expenses, including salaries, utility bills, etc. The I&S tax revenue is used to make the payment for the bonds that were approved by voters several years ago to build the new high school gym and the addition to East Elementary.

In order to qualify for the extra funds, the school board wants to raise the M&O tax rate to $1.17 while eliminating the I&S tax. That way, the school district can get the additional money from the state, and the taxpayers can maintain a total tax rate of $1.17. If the new plan is approved, the bond payment will be paid with the M&O tax funds, Seymore said.

At a meeting last week, the school board agreed to set that proposed rate for publication and schedule a public meeting to discuss the proposed tax rate on July 9. The meeting will start at 6 p.m. in the Board Room of the BISD Administration Building, 208 N. Miller St. The general public will be encouraged to attend and participate in the discussion.

Immediately following the public meeting about the tax rate, the school board is expected to vote to adopt the proposed M&O rate of $1.17. However, the school district is not allowed by law to raise the M&O tax above the current $1.04 rate without approval from local voters. Therefore, in that same meeting, the school board plans to schedule a Tax Ratification Election, officially requesting permission to raise the M&O tax rate to $1.17. The election likely will be scheduled for Aug. 25.

However, in order to make sure the school district is fully funded regardless of whether or not the tax rate is approved in the election, the tax rate that the voters actually will vote on will also include the original $0.13 rate for the I&S with the assurance of the school board that, if the rate is approved, they will reduce the I&S rate to $0.00, keeping the total tax rate at $1.17.

The reason for what seems to be a confusing situation is that as the school board works on its 2018-19 budget, they must consider two scenarios – one in which the voters approve the new tax rate and another in which the voters decline to approve it. Since a tax rate can be lowered but cannot be raised higher than an approved rate, if the $0.13 I&S rate is not included in the published tax rate, the school district could be struggling to pay the bond payment if the rate is not approved by the voters.

In other words, Seymore said, the rate is structured so that if voters decline to approve the $1.17 M&O rate, the district will not lose tax revenue, because the rate will continue to be a total of $1.17 — $1.04 M&O plus $0.13 I&S. But, if the voters approve the proposed tax rate, the school board will immediately reduce the I&S rate to $0.00, keeping the total tax rate at $1.17, he said.

To ensure that the school board will follow through on the plan to keep the total rate at $1.17, Seymore said, the school board will approve two tax rates at the July 9 meeting. They will approve a total tax rate of $1.30 — $1.17 M&O plus $0.13 I&S – and then also approve a second tax rate that will total $1.17 — $1.17 M&O plus $0.00 I&S, which will be the final rate, if the proposal is approved, he said.

“It is very confusing and hard to explain why. But, the reason is, it’s the legality of posting,” Seymore said. “You can always set rates for less than you post but not more. So, we’re posting two postings to make sure we cover that. We’ll set it for less if it passes. The total is going to be $1.17, period.”

One thing that will be changed is that if the new tax rate structure is approved by voters in the Tax Ratification Election, the rollback rate will be raised from $1.04 to $1.17 and, officially, the I&S rate could be added back in at some time in the future without further voter approval, creating the potential for a higher total tax rate in the future.

Seymore acknowledges that could be a concern but encourages trust in the elected officials to do the right thing. “That’s why you have to believe your school board members are going to do what you elected them to do,” he said.

Regardless of whether or not the voters approve the proposed tax rate, he said, the rate will continue to be a total of $1.17 per $100 valuation. The difference is, according to Seymore, that if the M&O rate is raised to $1.17, BISD will qualify for an additional $270,000 from the State.

“Whatever happens in the election, it’s still going to be $1.17, no matter what. It’s not going to change what your bill is. Your bill just says $1.17; that’s what it’s going to say,” Seymore said. “The only difference will be how we report it to the state. Then we will get the additional money from the state if it passes, and we won’t if it doesn’t. Your bill is going to say $1.17, no matter what. I wish I could explain it better, but it’s a complicated thing.”


Story by Tony Pilkington and Carla McKeown/Breckenridge Texan


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