Thoughts on the Growth of School District Property Taxes

 

 

The property tax buy-down of 2006 created a temporary dip in school district property taxes, but that dip disappeared as growth in school district property taxes accelerated after 2010. Thanks to that growth, school districts collected $6.6 billion more property taxes in 2015 than in 2010.

The Growth of Property Taxes by Entity Type chart (below) shows that more than half of all property tax dollars go to school districts. Cities, counties and special districts collect the remainder. According to the Texas Comptroller of Public Accounts, for every dollar that counties collect, schools collected more than $3.24 in property taxes as of 2015.1 

TaxesByEntityType_1996-2015.png

Yet, the ratio of school property taxes to county property taxes is not uniform across the state. The map at the top of the page shows how many school district property tax dollars are collected per county for every dollar the county collects.2 For example, the highest ratio occurred in Midland County where the school districts collected $7.78 for every dollar the county collected; Gregg, Oldham, Denton, Dallas and Collin also had 2015 ratios of at least $5.00.

Overall, the map shows that the eastern two-thirds of the state contains most of the counties where the school districts collect more than twice as much property taxes (ratios of $2.01 and greater) as counties collect — with the higher ratios found primarily in counties around the triangle formed by the Dallas-Fort Worth, Houston-Galveston and San Antonio-Austin metropolitan areas. 

In the western third of the state, the higher ratios appear largely in the Midland-Odessa area and in the northern part of the Panhandle. 

Meanwhile, the counties with higher ratios, $2.01 or more, appear to share a common characteristic: greater taxable values. Three reasons explain this relationship.

First, greater taxable value allows school districts the option of raising additional revenue to pay for more computers, a nicer football stadium, etc., that the less wealthy school districts cannot afford. Second, the greater taxable value often requires the wealthier school districts to raise their tax rates to collect additional taxes to “share the wealth” with the state for redistribution to property-poor districts per the “Robin Hood” plan. 

Third, and perhaps most importantly, even though total state spending on school districts has increased over time, state funding for school districts has declined on a per student basis. As per student funding declined, local property tax payers had to cover more and more of the state’s share. The Texas Tribune noted that, from 2008 to 2017, on a per student basis, local spending grew $990.21, state spending fell $339 and federal spending grew $45.06.3 Thus, while the state claims to be spending more money than ever on schools, in actuality school district property taxes are growing much more quickly simply because total state appropriations for school districts has failed to keep pace with student population growth forcing schools to depend on local property tax growth.

On a percentage basis, the state provided 48.5 percent of school district funding in 2008. Since then, the state’s share of funding fell considerably as seen in this graph (below) created by the Legislative Budget Board.4 

LBB_chart.png

Do not be misled by the surge in the state’s share of funding from 2006 to 2008 in the LBB chart. As the final chart (below) shows, the state share of funding for schools stayed around 45 to 47 percent throughout the 1990’s, hitting exactly 47 percent in both 1991 and 2000.5 

StateShareofRevenue.png

In 2001, the state share fell and kept falling year after year. In 2006, as its share bottomed out, the state finally reversed course and started putting more funds into schools — for two years. Then they reversed course again forcing school districts to rely more and more heavily on local property taxes for funding. In fact, the state institutionalized a dependence on the growth of property values to fund schools at the time of the 2006 property tax buy down. For example, the General Appropriations Bill notes, for allocation of Foundation School Program funding for the 2018-19 biennium, “Property values and the estimates of local tax collections on which they are based, shall be increased by 7.04 percent for tax year 2017 and by 6.77 percent for tax year 2018.”6 Similar notes appear in prior biennium budgets.

According to the LBB, total Foundation School Program funding for the 2016-17 biennium reached $90 billion with local property taxes contributing an estimated $51.1 billion of that total. Thus, for the biennium, the state’s share of funding sank to 43.2 percent; although, as the LBB chart indicates, the percentage fell significantly from 2016 to 2017.

Consequently, greater taxable value inevitably resulted in a higher ratio of school district property taxes to county property taxes largely as a result of the state’s de facto decision to abrogate its responsibility to fund schools. 


 1 Texas Comptroller of Public Accounts. “Biennial Property Tax Report: Tax Years 2014 and 2015.” Accessed July 31, 2017 at www.comptroller.texas.gov/taxes/property-tax/docs/96-1728.pdf.
2 Potter County and Randall County appears in yellow on the map because the school district taxes in Randall are reported with those of Potter County.
3 Ross Ramsey, “Analysis: The state’s declining support for public education in Texas,” Texas Tribune, Dec. 12, 2016. Accessed Aug. 2, 2017 at 
www.texastribune.org/2016/12/12/analysis-states-declining-support-public-education/.
4 Texas Legislative Budget Board. Fiscal Size-up: 2016-17 Biennium. Accessed Aug. 3, 2017 at www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp.pdf.
5 Data for 1991 through 1999 from Texas Legislative Budget Board. Fiscal Size-up: 2004-05 Biennium. Accessed Aug. 3, 2017 at http://www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp_2004-05.pdf. Data for 2000 through 2007 from Texas Legislative Budget Board. Fiscal Size-up: 2008-09 Biennium. Accessed Aug. 3, 2017 at www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp_2008-09.pdf.
6 Legislative Budget Board. “SB 1 – Conference Committee Report” (2018-19 State Budget). Accessed Aug. 4, 2017 at www.lbb.state.tx.us/Documents/Appropriations_Bills/85/Conference_Bills/SB1_Conference_Bill.pdf.​
 

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