Thursday, February 25, 2021

Of Bonds and Taxes

The Richardson ISD is asking voters to approve a bond issue for capital projects. The subject is confusing enough without people using confusing language to talk about the bond. And by people I mean both the state legislature and school board candidates themselves.

Let's start with the numbers. According to the RISD, "RISD’s total tax rate is $1.4047 per $100 of taxable assessed value. The tax rate is separated into $1.0547 for maintenance and operations (M&O Tax Rate) and $0.35 for principal and interest payments (I&S Tax Rate) on debt outstanding. The I&S tax rate would not change if Bond 2021 is approved by voters." (emphasis added)

Now, the confusing language. A recent state law (Texas HR3) requires "any ballot proposition in bond elections to include the language 'THIS IS A PROPERTY TAX INCREASE,' regardless of whether districts are asking to change their tax rates." (DMN). Again, RISD is not changing its tax rate. The reasoning for this confusing language is that if RISD would just not issue bonds, it could lower its I&S tax rate. According to the legislature's cockeyed thinking, by not decreasing tax rates, RISD is actually increasing taxes. (This could backfire on the legislature in the future. After enough elections with this required language even when tax rates are staying the same, or even if they are lowered, voters might become inured to the language, making it easier for school districts to slip real tax increases past voters. Again, this is not what RISD is doing. It's keeping tax rates the same.)

Finally, the misunderstandings. The Advocate Lake Highlands has a news article introducing RISD District 1 candidate Tony Casagrande, which includes this questionable quote from Casagrande:

For this election, the future of the district’s facilities is going to be a challenge to the district’s great teachers and student programs because of the reported plan to not seek a tax revenue increase. This means the bond that is up for election, that is so critically needed, would have to be paid for through some other means like the operating budget.

Huh? Either Casagrande was misquoted or he doesn't understand the bond proposal. It's true that RISD doesn't plan to seek a tax rate increase (despite HR3's language requiring all bond elections to say they are tax increases). But that does not mean that the bonds have to be paid for out of the operating budget. I&S tax revenues will be sufficient to pay back the 2021 bonds. No M&O tax revenues will be used to pay back the 2021 bonds. Tony Casagrande should clear that up. And, if necessary, bone up on school finance. It'll take up a lot of his time if he's elected.

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