TX school districts say bonds won’t increase taxes. Ballots say otherwise. What’s the deal?

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Voters headed to the polls May 4 may notice a disclaimer on some school ballot measures: “THIS IS A PROPERTY TAX INCREASE.”

The statement must appear alongside school bond propositions, even if the measure being voted on will not increase property tax rates — a point area districts are emphasizing as voters head to the polls. The requirement is the result of a 2019 law passed by the Texas Legislature that made sweeping changes to school finance.

So what’s the deal? Will property taxes increase or not? The key lies in the difference between property tax increases and property tax rate increases.

School property tax rates are made of two parts: the maintenance and operations rate and the interest and sinking rate — the rate that pays for bonds.

OK, this is where it can get confusing. Stay with me.

The two rates can change independently of one another, which means a district’s overall rate can go up or down as the interest and maintenance rates change. Theoretically, a district could raise the interest and sinking rate to pay for a bond but if the maintenance and operations rate drops, then then overall tax rate could drop too, or remain the same.

Some school districts are able to pay off past bond debt early and keep their current interest and sinking rate to pay for new bond debt. That means the overall property tax rate doesn’t change or goes down, depending on the maintenance and operations rate.

Take the Mansfield bond proposition package, which includes five bond propositions totally $777 million.

The district says property owners will not see their tax rate increase because the district is paying off debt early. That, paired with growth in the community, allows the district to repay the bonds voters will consider in this local election with the same interest and sinking tax rate — 36 cents — that they’ve had since 2021, according to the district. (The maintenance and operations rate has dropped each year.)

“Simply translated — ‘THIS IS A PROPERTY TAX INCREASE’ means that taxes will have to be levied in order to repay the bonds,” the district’s bond website reads. “However, MISD can make all existing and new bond payments with the $0.36 Interest and Sinking tax rate, also known as the debt service tax rate, residents are currently paying.”

The district is expected to keep the debt service rate the same even if the bond doesn’t pass.

Or look at Grapevine-Colleyville: The district says its current interest and sinking tax rate of 19.57 cents isn’t expected to change as a result of its proposed $150 million bond package, because the district has been able to pay down its debt sooner than required as projected property values rise.

Were the measures to fail, the Board of Trustees will decide if the rate should stay the same, increase or decrease as part of an annual evaluation of anticipated tax revenue and debt payment, according to a spokesperson for the district.

School bonds are also on the ballot in the Castleberry, Everman and Lewisville School districts. In Castleberry a 4.82 cent tax rate increase is expected, and in Everman tax rates are expected to go up by 13.5 cents. Lewisville’s rate will not be impacted by the bond.

A tax increase?

So are school bonds a property tax increase? Technically yes, but they are not a necessarily a property tax rate increase.

People’s property tax bills, in theory, could be lower if the debt from one bond wasn’t replaced by a new bond and the interest and sinking rate dropped.

“That’s why they require the statement on the bond propositions,” said Sheryl Pace, a senior analyst at the Texas Taxpayers & Research Association. “It’s because it is a property tax increase over what the taxpayer would have paid had the bond not passed.”

Additionally, property owners in Texas school districts could still see a property tax increase if their property values increase.

“If the value of your property increases, but the tax rate levied on that property stays the same, you will pay more in property tax because of the value increase,” Pace said.

The property tax increase ballot language has raised questions for voters in recent elections, including in the Grapevine-Colleville and Mansfield school districts

“We do often receive clarifying questions regarding the language on the ballot,” Grapevine-Colleyville spokesperson Nicole Lyons said in a statement, responding to written questions. “The district is intentional about including the ballot language and explanation ... in all of our communications regarding the bond — community presentations, print pieces, bond website, tax rate video, social media posts, etc. GCISD honors the state requirements and standards, and is committed to remaining fiscally responsible and transparent.”

There was an effort in the past legislative session to add some clarity. Sen. Tan Parker, a Flower Mound Republican, and other lawmakers filed legislation that would have changed ballot the disclosures. Parker’s bill would have made the ballots read “THIS IS A PROPERTY TAX RATE INCREASE.”

Another by Rep. Brandon Creighton, a Conroe Republican, would have changed the wording to “THIS AUTHORIZES THE DISTRICT TO TAKE ON ADDITIONAL DEBT,” which is easier to explain to voters when the tax rate isn’t being increased, a spokesperson for the Mansfield school district said in a written response to questions.

The bills didn’t gain traction.

As the state grows rapidly, public schools need to plan for expansion while remaining “fiscally responsible and accountable to voters,” Parker said, laying out the bill in an April 2023 committee hearing. The legislation doesn’t aim to make “crazy spending” easy for districts, Parker said.

“Rather we value taxpayer transparency, and all we’re seeking to accomplish with this legislation is to reduce the confusion around these school ballot bond measures,” Parker said at the time.