At Tuesday night’s Ector County ISD (ECISD) board meeting Board Members were presented with a report from the recently completed School Bond Committee as well as an hour-long presentation on the $420,359,129 2023-24 proposed school budget.
During the presentations it was noted by the presenters that the bond committee felt it important, in offering a bond to the voters, that the District stay below an approximate $400 million price tag as the District had this much in available “bond capacity”. According to the District, at current tax rates ECISD could issue up to $400 million in new debt without having to increase property owner’s tax rates to repay the bonds.
During the budget presentation which followed it became clear that the “bond capacity” being touted by ECISD amounts to nothing less than a funding scheme that is the result of years of overbilling of property taxes by the school district.
School taxes, unlike other governmental entities, have two components: first is the maintenance and operations (M&O) part and secondly the interest and sinking (I&S) part. M&O is used to pay for all of the operations of the District such as salaries, utilities, transportation and maintenance. I&S, under state law, can only be used to pay for the costs associated with servicing the District’s debt. I&S is like a homeowner’s monthly mortgage bill while M&O is everything else.
In recent years the Texas State Legislature has been very concerned about the ever growing M&O costs being shouldered by local taxpayers and began a system of providing more and more state dollars to school districts through a system called “compression”. Basically, the State’s idea was to shift surplus state tax dollars to the school districts in exchange for the districts being capped at the maximum amount they can charge taxpayers in local M&O taxes.
Local voters will recall that in 2018, Ector County voters voluntarily raised M&O rates for county taxpayers by $0.13 per $100 of property value through a tax ratification election or TRE. In 2018 when the TRE was approved the maximum state allowed M&O rate increased from $1.04 per $100 to $1.17 per $100. The TRE election resulted in a 12.5% increase in local M&O taxes or approximately $18,000,000.
Since 2018, as the State has steadily increased the state funding to school districts this rate has been lowered or “compressed” to a maximum rate of $0.9235 per $100 valuation in an effort to provide property tax relief to local taxpayers. This compression should have resulted in significant tax savings of over 21% to local property owners.
For example, for a homeowner with a taxable value on their home of $250,000 the reduction in school taxes from 2018 to 2023 should have resulted in a yearly savings of $616.25.
For ECISD taxpayers, however, the savings that state tax compression was designed to provide never materialized and local taxpayers have continued to pay high school taxes. Instead of providing the property tax relief planned by the Texas Legislature, ECISD simply shifted any compression savings across the ledger to the I&S column thus keeping the total local ECISD tax rate at $1.17792 and providing local property owners no relief on their high tax payments.
During Tuesday’s bond and budget presentation, Superintendent Muri, Chief Financial Officer Debra Ottmers and various members of the ECISD Board of Trustees lauded their financial stewardship and oversight in keeping taxpayer’s tax rate flat instead of providing the reduced taxes intended by the state legislature. Ottmers stated that, instead of homeowner’s receiving a tax reduction, that homeowners like to see their expenses held at a flat level and that is what ECISD had done.
“The Texas Legislature has worked hard over the past several sessions to lower Texan’s property tax bills and it’s really frustrating to see Dr. Muri and the ECISD Trustees take such a blatant end run around our elected legislators. For ECISD to be raking in ever increasing state dollars but refusing to pass along a rate cut to local taxpayers as intended is really disappointing.” stated Ector County Republican Party Chair Tisha Crow. “On top of that, to ask us to applaud their overtaxation of the hard working taxpayers in Ector County and to try to dress up their overtaxation as anything other than a dirty trick to get a bond passed is really incredible.”
Based on an analysis of the compressed tax rate versus the tax rate actually levied by Muri and the ECISD School Trustees, Odessa Headlines calculated the overcharge amounts for Ector County property owners based on the taxable value of their home or business.
“For local taxpayers to have had thousands of dollars pulled from their pocket as a result of the District’s creative accounting really angers me” stated Crow. “Remember, this is in the middle of COVID and the big reductions many people saw in their income. The school board seems to have forgotten that because of the Biden created inflation many people are struggling to make ends meet. These overcharges represent money that I know many taxpayers need to make car payments, house payments, or to buy school clothes and supplies. Because of being overcharged on their taxes, families have had to do without many necessities and Dr. Muri and his staff seem to be just fine with that but I’m not. I am confident that Ector County residents are going to be furious when they realize how ECISD has picked the taxpayer’s pocket.”
The ECISD 2023/24 tax rate will be up for discussion again at tomorrow night’s school board meeting and local residents are encouraged to attend. The meeting will be held at 6:00 PM at ECISD headquarters at 802 N. Sam Houston.