HISD considers a property tax increase
Top officials in the Houston Independent School District say they can't rule out raising local property taxes to make up for severe state funding cuts expected next year.
"We'll just have to put everything out on the table," school board president Paula Harris said this week.
Melinda Garrett, HISD's chief financial officer, said the administration is considering various options for balancing the budget, including those that involve increasing the tax rate and reducing a special tax discount.
"I wish we could hold them steady," Garrett said. "It depends on how large the final state cut will be and how bad you want to raise class sizes and let people go."
Garrett estimates, based on discussions at the state level, that the district will be $170 million short next year. That's a gap about half as large as one consulting group predicted initially based on the Legislature's early, bare-bones budget proposals.
The HISD board will have to decide whether it wants to balance the district's budget through cuts alone or with additional tax revenue.
Estimates from HISD documents show that the district could, if the board chose, cover most of the $170 million shortfall by raising the tax rate by the maximum 7 cents and by abolishing the special tax break known as the optional homestead exemption.
That would cost the owner of an average-priced home an extra $580 a year.
"That's not likely to happen," Garrett said.
Superintendent Terry Grier has yet to recommend any scenarios to the school board.
On Thursday, he plans to jump-start the budget conversations, unveiling a plan to cut costs at the central office.
It will include the elimination of up to 250 jobs, according to Garrett. Some of the positions are vacant, but numerous employees could lose their jobs. An exact number wasn't available Tuesday.
The prospect of hiking taxes came up during a live TV show that HISD officials aired on the district's cable television station Monday night.
Harris, the board president, noted on air that HISD — which has the lowest tax rate among Harris County school districts — has the option of raising its rate by 7.33 cents without voter approval.
She also said she understood that the homestead exemption was "near and dear" to taxpayers, but it was up for discussion among district officials "as we make these hard (budget) decisions."
HISD has granted home- owners the optional exemption — which reduces the taxable value of their property by 20 percent — since the early 1980s. A few other Houston-area districts, including Cypress-Fairbanks, Spring Branch and Pasadena, also grant an optional exemption of varying amounts. The full 20 percent break is less common across the state.
Lowering the exemption to 15 percent would net HISD an estimated $23.4 million for its general fund and $3.6 million for debt service, according to the district's analysis. This change would cost the owner of an average-priced home an extra $113.17. (The calculation is based on a home appraised at $195,680.)
If the district eliminated the exemption, it could net $107.9 million.
HISD Trustee Greg Meyers, one of the board's most vocal fiscal conservatives, said the homestead exemption is "an important piece for our taxpayers" and raising taxes should be a last resort.
But, he added, "At the end of the day it would be short-sighted for anybody to not consider everything that's on the table."
HISD's current tax rate is $1.1567 per $100 of assessed value. The district would net nearly $10 million for every penny it increased the tax rate, according to Garrett.
HISD Trustee Harvin Moore blamed state officials for putting local school districts in trouble financially.
"It's really up to the state to make the big decisions about whether they're going to do their share as partner," he said.
Rhonda Skillern-Jones, a parent on HISD's budget advisory committee, said she thinks parents are starting to accept that their tax bills might grow next year.
"I think we're all buying into that as a likelihood and weighing that versus the gravity of what we stand to lose," she said.
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