Is Property Tax Relief Working ? : Some Basics TTARA Annual Meeting October 11, 2007

Dan CaseyDan Casey

General Structure of HB 1 Tax Relief Program Adopted in 2006Compression of 2005 M&O rate is the major

vehicle2006-07: 88.67% ($1.33 for most districts)2007-08: 66.67% ($1.00 for most districts)2008-09 and thereafter: Compression percentage

determined by Commissioner of Education based on appropriations made to Property Tax Relief Fund

Additional four-cent M&O rate increase permitted by school board action (most adopted this rate for 2006)

I&S tax rates not affected by HB 1 program

Moak, Casey & Associates 2

M&O Rates Going into 2007-08In 2006-07, 529 districts adopted tax rates

that were at or above $1.37All of these districts will face rollback

elections if they want to adopt a rate in future years that is greater than their compressed rate plus 4 cents

Another 173 districts were within 4 cents of $1.37 last year and are likely to hit the $1.04 barrier in the near future (given the additional compression taking place this year)


Rollback Provisions for ISDsDistricts may seek a rollback election up to $1.17

M&O rate for most districts116 districts have called rollback elections for fall

2007Most on November ballotSeveral earlier election dates due to early

delivery of certified tax rollApproved by voters to date: Maud, Redwater,

Crowell, Whitesboro and YsletaRejected by voters: Schulenburg


Rollback Provisions, cont’d.We emphasize to districts that this is

a rollback election, not an authorization election

Districts cannot get permission to tax above a certain rate and maintain that permission for future years without levying the tax


Districts Holding Rollback Elections



Traits of Rollback-Election Districts• Generally small districts in enrollment• Other factors:

• Little value or enrollment growth• Low target revenue per WADA—

about $300 per student less than state average of $4,919

• 2005-06 target revenue year for most• Indicates that financial need is a

major factor in adopting the higher rate and calling the election

Rollback Elections: Chairman Eissler“Really what we’re seeing with that

is a new way of raising money in school districts that is in partnership with the taxpayers. The state buys down the rate, and if the school district feels that their hold harmless or their growth money isn’t sufficient, then they raise the tax rate.”-Quorum Report



Public Education Spending

“In the absence of funding for property tax relief, funding for the (Foundation School Program) is lower than in the 2006-07 biennium due to strong growth in local school district property values, which results in reduced state obligations.”

Source: Legislative Budget Board, Summary of Conference Committee Report for House Bill 1


General Characteristics of the Funding SystemFunding increase primarily available

through tax rate increasesExceptions based on specific state

programs or increases in super penny yields

Increases in property values result in lower state funding with one-year exceptions for tax effort above compressed rate

Enrollment growth funded

Funding Basics for 2007-08Funding levels depend on 2006-07 final target revenueBest of 2005-06 or 2006-07 under old school finance law at $1.50 rate

Third alternative is based on effective tax rate calculation


Basics, cont’d.• Revenue levels associated with tax

rates • Target revenue for compressed rate

• First 4 cents of optional rate @ $46.94 per penny per student

• Remainder of optional rate and rollback rate @ $31.95


Funding Increases for 2007-08Increased yield for four super pennies (from $41 to $47)

$23.63 per WADA for salary increase

These two items represent approximately a 1% increase in revenue per student


Our System? (2007-08 school year)Revenue Target: $28.997 billion

Tier I (state): $7.245 billion

Tier II (state): $1.038 billion

Other (state): $927 million

Local taxes @ compressed rate: $14.330 billion

Recapture: $973 million

Hold Harmless: $6.431 billion


Partners

Lynn M. Moak Daniel T. Casey

Associates

Joe Wisnoski Amanda Brownson, Ph.D.

Bob Popinski

Consultants

Kathy Mathias Larry Groppel

Thomas Alvis

Research Analyst

Maritza Kelley

Administrative Staff

Kari Ruehman Susan Moak


Is Property Tax Relief Working ? : Some Basics TTARA Annual Meeting October 11, 2007

Documents

Transcript of Is Property Tax Relief Working ? : Some Basics TTARA Annual Meeting October 11, 2007