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Texas House Bill 3
Graydon Hicks
Wednesday, April 10, 2019

The most advantageous education bill currently under review in the legislature is House Bill 3.  It has been reported that HB3 adds about $7B to public education.  HB3 has estimated values published by the comptroller’s office for the school years 2019-2020 and 2020-2021; however, when asked for the spreadsheets and formulas that were used to calculate the funding, the House Education Committee chairman said he did not have them.  The sample runs and information available on HB3 do show two important pieces of information: 1) it includes another tax compression, and 2) there will be “extra” money available to districts to make up for that compression.  Sound familiar?  It should.  We went through this in 2007….tax rates were compressed from a maximum of $1.47 to $1.00 (M&O), with an option to hold elections to raise it to $1.17.  We were told the state would make up the difference….Additional State Aid for Tax Relief (ASATR). 

Guess what?  We lost an enormous amount of local revenue, and the state ended ASATR, resulting in even more revenue loss.  What else?  The state started to budget in, every biennium , an annual 7.5% increase in our property values…even before they were assessed.

What is different this time?  The tax rate will be further compressed from a maximum of $1.17 to $1.09. 

How does this affect Fort Davis ISD?

If we assume that our appeal on rising property values is somewhat successful, our 2018 property values will be around $213M (state says $219M, CAD says $209M). If we further assume to take the comptroller’s office estimates at face value, we get the following: 

2019-2020 FY                                Current                                                                   HB3

Local taxable values                        $213M                                                                  $213M

Tax rate                                            $1.17                                                                   $1.09

Local collections                              $2.375M                                                               $2.215M

State contribution                            $234K                                                                   $289K

Additional from HB3                        $0                                                                          $142K

Total revenue                                  $2.609M                                                                $2.646M

2020-2021 FY                                Current                                                                    HB3

Local taxable values                      $219M (if win an appeal)                                       $219M

Tax rate                                          $1.17                                                                     $1.09

Local collections                             $2.415M                                                                $2.29M

State contribution                           $164K                                                                    $225K

Additional from HB3                       $0                                                                           $88K

Total revenue                                  $2.579M                                                                $2.603M

If the trend on the “extra” money from HB3 continues (like ASATR did), then FY 2023-2024 will see no revenue from the state, with property values rising to approximately $240M.  Local revenue will be the only revenue and limited to approximately $2.56M.  Annual expenses are hovering around $3M, with only rises in store.

The underlying problems with the current funding system do not go away.  The tax compression and “extra” money from the state are nothing more than temporary fixes that only postpone the inevitable fact: the district will be basically broke by the summer of 2025.  Beware of the wolf in sheep’s clothing.  The legislature is giving us the smoke and mirror treatment, yet again.