Local public schools taxes in Texas are comprised of two different rates. The first portion is the Maintenance and Operations (M&O) rate, which funds daily costs and reoccurring or consumable expenditures such as teacher salaries, electricity, fuel, supplies, etc. The second portion is the Interest and Sinking (I&S), or Debt Payment, rate, which is used to repay debt for longer-term capital improvements like the construction of new schools.
Alvin ISD has a current M&O tax rate of $1.04 and I&S tax rate of $0.41 for a total tax rate of $1.45 per $100 of certified property value.
I&S funds can only be used to pay back debt, while M&O funds have more flexibility and can be used to fund anything from salaries to the purchase of books and equipment and even pay back debt for the construction of schools.
Alvin ISD’s TRE “Penny Swap” (Proposition B) will provide authorization for the school district to increase the M&O tax rate by 13 cents, and at the same time, decrease the I&S tax rate by an equal 13 cents, per school board resolution. This type of TRE is often called a “Penny Swap” because the exchange in pennies is tax rate neutral (no change).
Any Texas school district that adopts a M&O tax rate above $1.04 must hold a Tax Ratification Election (TRE) to provide voters the opportunity to approve, or ratify, the higher rate.
Why Consider a TRE "Penny Swap?
The TRE “Penny Swap” is designed to maximize state funding opportunities and reduce the local tax burden while funding school construction bonds.
The state contributes funding based on the M&O rate but not the I&S rate, meaning pennies on the M&O rate generate more revenue. The TRE “Penny Swap” would allow the school district to receive an additional $8.4 million annually in state funding, which would enable Alvin ISD to implement the proposed bond program with no increase to the current school tax rate.
The M&O tax rate would become $1.17 and the I&S rate would become $0.28. By moving 13 pennies from the I&S rate to the M&O rate the District will keep the overall total tax rate the same but will yield $8.4 million more for the District and provide flexibility in financing school construction.
Please note, completion of bond projects without an increase to the local tax rate is only possible with voter approval of both propositions.
Therefore, if voters approve the Bond Election, but not the TRE “Penny Swap,”
Alvin ISD will receive the increase in state funding, but the District would not have voter approval to finance the construction projects.
If voters approve the TRE “Penny Swap,” but not the Bond Election,
Alvin ISD will not receive the increase in state funding. In this scenario, the approval of the bond projects would result in an increase, up to 9 cents, on the I&S tax rate. This equates to approximately $13.51 a month for the average taxable home value of $180,124.
Homeowners Age 65 and Over
Regardless the result of either proposition, Alvin ISD property taxes for citizens age 65 or older would not be affected as long as an over 65 homestead exemption application has been filed with the local appraisal district.
According to state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older cannot be increased above the amount paid in the first year after the person turned 65 – regardless of changes in tax rate or property value – unless significant improvements are made to the home.
For more information on the over 65 exemption, visit the Brazoria County Appraisal District site.
The ballot, which is set by state law and cannot be changed, will ask voters to approve a total tax rate of $1.45 per $100 property valuation. It will also say that this rate is $.13 higher than the school district rollback tax rate ($1.04). The proposition does not explain that the I&S tax rate was reduced by the same amount by Board Resolution so that the total tax rate of $1.45 remains the same with the passage of Proposition B.
The actual ballot language asks voters to vote For or Against:
Approving the ad valorem tax rate of $1.4500 per $100 valuation in the Alvin Independent School District for the current year, a rate that is $0.13 higher per $100 valuation than the school district rollback tax rate, for the purpose of (i) increasing revenue for maintenance and operations and (ii) maintaining the prior year’s overall tax rate of $1.4500 per $100 valuation.
The Alvin ISD Board of Trustees passed an additional resolution, not only committing to maintaining a tax rate equal to or less than the current rate, but further assuring the community of their commitment not to raise the I&S tax rate without future voter action through a community wide election.
Election Day: November 6, 2018
Early Voting: October 22 – November 2, 2018 Register to vote by October 9, 2018