Texas Comptroller of Public Accounts

Texas Comptroller of Public Accounts, Glenn Hegar

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Chapter 4
Focus on School District Taxes

Focus on School Taxes

In 2007, 1,026 Texas independent school districts (ISDs) reported property tax rates, levies and values to the Comptroller’s office. The ISDs reported an average adopted tax rate of $1.19 per $100 of appraised value and more than $18.9 billion in tax levies on a total taxable property value of $1.5 trillion.

The average tax rate decreased by 26.3 cents since 2006 due to the school district maintenance and operations (M&O) tax rate reductions required by House Bill 1, passed by the 79th Legislature, Third Called Session. Even though taxable values increased by more than $150.2 billion, or 11.1 percent, the levy decreased by $2 billion, or 9.8 percent, the result of the decreased average tax rate.

School Tax Rates

About 98 percent of Texas school districts reduced their local adopted tax rates in 2006; less than 1 percent kept the same rate and nearly 1 percent increased their rates. The 2007 average statewide tax rate was $1.19 per $100 of value, compared to the 2006 average statewide tax rate of $1.45 per $100 of value. The rate calculation uses the adopted tax rates divided by the number of school districts reporting.

Exhibit 17 provides rate-change information for school districts.

Exhibit 17
Changes in ISD Tax Rates, 2006-07

School Districts Increasing Tax Rates
Increased Tax Rate Number of School Districts Percent of All School Districts
Increase of $0.15 or more 0 0%
Increase of $0.10 to $.1499 3 0.3%
Increase of $0.05 to $0.0999 1 0.1%
Increase of $0.01 to $0.0499 5 0.5%
Total ISDs Increasing Tax Rates 9 0.9%

School Districts Keeping Same Tax Rates
Did Not Change Tax Rate Number of School Districts Percent of All School Districts
No Change 3 0.3%

School Districts Decreasing Tax Rates
Decreased Tax Rate Number of School Districts Percent of All School Districts
Decrease of $0.01 to $0.0499 20 2.0%
Decrease of $0.05 to $0.0999 34 3.3%
Decrease of $0.10 to $0.1499 31 3.0%
Decrease of $0.15 or more 929 90.5%
Total ISDs Decreasing Tax Rates 1,014 98.8%

Source: Texas Comptroller of Public Accounts.

School district tax rates have two components. The maintenance and operations (M&O) rate covers general operating costs such as teacher salaries and school building maintenance. The interest and sinking (I&S) rate, typically referred to as the debt rate, is used to repay school district debt for voter-approved bonds to build instructional facilities. In a few school districts, increases in the I&S rate offset the decrease in the M&O rate required by House Bill 1, or even caused an overall rate increase.

Exhibit 18 reflects the range of tax rates, based on $100 of property value, which range from a low of $0.70 per $100 of value in Kelton ISD in Wheeler County to a high of $1.67 in Prosper ISD in Collin County.

Exhibit 18

Range of 2007 School District Tax Rates
Total School District Rate Number of School Districts Percent of All School Districts
Less than $1 50 4.9%
More than $1 to $1.20 552 53.8%
More than $1.20 to $1.40 343 33.4%
More than $1.41 to $1.50 63 6.1%
More than $1.50 to $1.60 17 1.7%
More than $1.60 1 0.1%
Total 1,026 100%

Source: Texas Comptroller of Public Accounts.

In 2007, 50 school districts adopted tax rates of less than $1 per $100 of assessed value, 45 more than in 2006. About 93 percent of the school districts (958) had combined rates more than $1 to $1.50 per $100 of value. This is an increase of 239 school districts. The remaining 18 districts, or 1.8 percent, had rates from more than $1.50 to $1.67.

The state’s 2007 average M&O rate for ISDs was $1.04, while debt rates averaged $0.15. About 23 percent of ISDs (238) did not have a 2007 I&S rate for repaying debt obligations. Of the 788 ISDs with debt rates, 43 districts had a debt rate of more than $0.40. Prosper ISD, in Collin County, had the highest debt rate at $0.50. With its M&O rate of $1.17, the district’s total rate was $1.67.

As Exhibit 19 shows, every one of the top 10 school districts in Texas has a rate property tax that is more than $1 per $100 of valuation.

Exhibit 19

Top Ten School Districts in Tax Levy, 2007
School District Taxable Value TotalTax Rate Reported Tax Levy
Houston ISD $93,677,690,335 $1.156700 $1,083,569,844
Dallas ISD $72,967,676,694 $1.199643 $875,351,626
Austin ISD $52,962,222,893 $1.163000 $615,951,903
Plano ISD $32,748,511,273 $1.268400 $420,911,157
Cypress-Fairbanks ISD $28,178,634,324 $1.324000 $374,040,048
North East ISD $25,088,796,209 $1.402900 $351,970,209
Northside ISD $27,251,544,704 $1.262500 $344,049,540
Lewisville ISD $21,591,517,273 $1.370000 $297,561,028
Fort Worth ISD $23,241,484,432 $1.190000 $276,273,396
Arlington ISD $19,729,590,281 $1.278000 $252,450,796

Source: Texas Comptroller of Public Accounts, Property Tax Assistance Division.

School Tax by Property Type

The Comptroller uses data that CADs submit electronically to estimate the distribution of exemptions across property value categories and to reclassify some of these categories according to type of property value. Residential inventory now is included in business properties. Manufactured homes, as well as farm and ranch improvements, are now included with the residential properties section.

The residential property category, including single-family homes, multifamily units, farm and ranch improvements and mobile homes, continues to bear the greatest share of the school tax burden. Texas residential properties represented 53.6 percent of the 2007 school tax levy, while single-family residences represented 46.3 percent. Property taxes assessed on single-family residences decreased by $900 million in 2007, as compared to 2006.

Business properties accounted for 42.5 percent of local 2007 school taxes, or about $8 billion. Commercial real estate bore the largest burden of all business properties, at 16.6 percent of the total tax burden, or $3.1 billion. Taxes on commercial personal property totaled $1.2 billion. The next-largest tax burden fell on oil and gas properties, at $1.1 billion. Industrial real property followed at $1 billion; industrial personal property at almost $1 billion; utilities at $500 million; and residential and special inventory at $100 million each.

Vacant lots and rural acreage generated 4.5 percent of school taxes, with about $900 million in school property taxes.

Exhibit 20 shows Texas properties grouped into four main property types: residential, business, acreage/lots/farm and ranch improvements and other personal property. (Note: totals may not add due to rounding.)

Exhibit 20
School Property Tax Burden (in billions), 2006-07

Property Category 2006 School Taxes Percent of Total 2007 School Taxes Percent of Total Dollar Value Change 2006 to 2007
Single-family Residential $9.6 46.0% $8.7 46.3% ($0.9)
Multifamily Residential $1.0 5.0% $1.0 5.0% $0.0
Mobile Homes and Other Personal $0.1 0.3% $0.1 0.3% $0.0
Farm and Ranch Improvements $0.5 2.0% $0.4 2.0% ($0.1)

Property Category 2006 School Taxes Percent of Total 2007 School Taxes Percent of Total Dollar Value Change 2006 to 2007
Vacant Lots $0.5 2.6% $0.5 2.5% $0.0
Rural Acreage $0.4 2.0% $0.4 2.0% $0.0

Business Properties
Property Category 2006 School Taxes Percent of Total 2007 School Taxes Percent of Total Dollar Value Change 2006 to 2007
Commercial Real Estate $3.4 16.2% $3.1 16.6% ($0.3)
Commercial Personal $1.4 6.8% $1.2 6.6% ($0.2)
Industrial Real Estate $1.1 5.2% $1.0 5.2% ($0.1)
Industrial Personal $1.0 4.6% $0.9 4.7% ($0.1)
Oil and Gas $1.3 6.1% $1.1 5.7% ($0.2)
Utilities $0.6 3.0% $0.5 2.9% ($0.1)
Special Inventory $0.1 0.3% $0.1 0.3% $0.0
Residential Inventory $0.1 0.5% $0.1 0.5% $0.0

Property Category 2006 School Taxes Percent of Total 2007 School Taxes Percent of Total Dollar Value Change 2006 to 2007
Vehicles $0.0 0.0% $0.0 0.0% $ 0.0
Total $20.9 100% $18.9 100% ($2.0)

Source: Texas Comptroller of Public Accounts.

The fourth type, other personal property, includes privately owned vehicles taxed in school districts. It represented less than one-quarter of 1 percent of total 2007 school taxes at $2.5 million. Allocation of tax estimates to property categories are based on values, exemptions and tax levies (not collections) reported by school districts. Values do not include taxes collected for county equalization or South Texas ISD.

Property Value Trends

For tax year 2007, taxable local values rose in 926 school districts, with an average increase in value of 11.8 percent. By contrast, 982 school districts experienced an average increase in value of more than 14.5 percent in tax year 2006. Values declined in 100 districts by an average of 5.9 percent in 2007. In the 2006 tax year, values declined by an average of more than 5.4 percent in 45 school districts.

Property values of single-family residences, before exemptions, rose by 11.6 percent in 2007, following increases of more than 10.3 percent in 2006 and 7.9 percent in 2005. This category is the largest in appraised value, representing 49.2 percent of all school district appraised values.

Multifamily residence values rose by almost 13.4 percent in 2007, following a10 percent increase in 2006.

Commercial real property increased 14.5 percent in 2007, following an increase of 13.4 percent in 2006. Industrial real property appraised values rose by 10.9 percent, following a 13.4 percent increase in 2006.

Industrial personal property gained 15.5 percent in value in 2007, following a 10.5 percent increase in 2006. Commercial personal property values rose by 9.1 percent, compared to an increase of 6.2 percent in 2006.

Utilities increased in value by 8.4 percent in 2007, after an increase of 3.3 percent in 2006.

Oil, gas and mineral properties rose by 2.4 percent in 2007.

Residential inventory, which is residential property held for sale by the developer, experienced its sixth year of rising average value, increasing by almost 29.5 percent in 2007. Special inventory, which is the inventory value of motor vehicles, boats, heavy equipment and manufactured housing that dealers are required to report to appraisal districts and county tax offices, rose by 8.2 percent.

School Districts Local Self Report Data, 2007

Property Tax Code Section 5.09 requires the Comptroller’s annual report to include, for each school district, the total appraised value by property class, the total taxable value and the tax rate. Exhibit 21 shows that Texas school districts had appraised values exceeding $1.7 trillion in 2007. Their taxable value, after deducting exemptions and other deductions, was $1.5 trillion. The combined school tax levy was more than $18.9 billion.

Exhibit 21
Texas School Districts Total Appraised Value

Property Categories
Category Value Percent of Total Value
A. Single-family Residential $846,867,140,486 49.2%
B. Multifamily Residential $76,765,812,366 4.5%
C. Vacant Lots $37,831,350,196 2.2%
D. Rural Real $70,270,053,648 4.1%
F1. Commercial Real $251,123,759,490 14.6%
F2. Industrial Real $85,939,853,314 5.0%
G. Oil, Gas & Minerals $95,220,532,650 5.5%
H. Vehicles $225,377,514 0.0%
J. Utilities $44,722,839,741 2.6%
L1. Commercial Personal $111,147,718,494 6.5%
L2. Industrial Personal $82,831,198,842 4.8%
M. Other Personal $5,623,492,204 0.3%
N. Intangible Personal $28,820 0.0%
O. Real Property, Inventory $9,416,544,667 0.5%
S. Special Property $4,606,641,507 0.3%

Category Value Percent of Total Value
Required Homestead Exemptions $85,914,644,344 5.0%
Local Optional Percent Homestead Exemption $30,570,931,449 1.8%
Local Optional Over-65 and Disabled Exemption $6,870,883,866 0.4%
Other Deductions $31,153,244,987 1.8%
Value Lost to Tax Freeze $41,921,865,908 2.4%
Value Lost to 10 Percent Homestead Cap $20,713,297,725 1.2%
Total Exemptions $217,144,868,279 12.6%
Taxable Value $1,505,447,475,660 87.4%

Tax Levy
Category Value
Actual Levy $18,874,239,532

Source: Texas Comptroller of Public Accounts, Property Tax Assistance Division.

PTAD develops data on total appraised value for each school district in the 15 property categories described in Chapter 3. Appraised value represents the productivity value of qualified agricultural and timberland, as well as the market value of all other property categories as of Jan. 1, 2007. Taxable value is the appraised value minus partial exemptions and other deductions.

Many school districts report little or no 2007 value in Category H: Tangible Personal Property: Nonbusiness Vehicles. Personal property not used to produce income, such as personal vehicles, is exempt from taxation unless a school district takes official action to tax it. Category M, Mobile Homes and Other Tangible Personal Property, represents the property value of other personal property.

Appraisal value deductions follow the subtotal value. These deductions include required homestead exemptions, local option exemptions value lost to the tax freeze, value lost to the 10 percent homestead cap and other deductions.

For 2007, 215 school districts granted local option percentage homestead exemptions ranging from 1 percent to 20 percent and 191 offered homeowners who are more than 65 years old or disabled a local option exemption. A homestead cap limits homestead value increases to 10 percent.

School districts may grant other deductions such as freeport exemptions, pollution control exemptions, tax abatements, exemptions for solar or wind power, economic development, low-income housing and historical exemptions. Taxable value reflects the deductions for all exemptions for each ISD and for the value lost to the tax freeze for homeowners aged 65 or older.

ISD reports do not include local school taxes by special county equalization districts or for South Texas ISD, a school district that operates tuition-free magnet schools for students in a three-county area. Tax rates reported are per $100 of property value. Full details of school district property values are available on the Comptroller’s Web site at www.window.state.tx.us/schoolvalues/proptax/annrpt07 (Excel, 315 KB).

Required Plug-ins

In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Microsoft Internet Explorer, Google Chrome and Apple Safari.