The other side of the story about the Dallas ISD 2015 Bond Proposal

Taxes – will they go up or not?

UPDATE #2 – That link in Update #1?  That talks about the bond debt DISD already has.  If you want to see the balloon payment document dated 10-7-15, you can get that here from DISD’s site or download it here.

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UPDATE:  DISD recently posted a new document to their bond site dated 10/6/15 which is different from the one presented to the Board.  I’m told it depends on balloon payments – you can see it here.  Working on understanding it…

In the meantime, the charts below are based on what was presented to Board when they voted to put the bond on the ballot.

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Will this bond raise your taxes?  Well… that depends on how you define “raise your taxes.”

Yes, this bond creates a new tax.  Yes, this bond depends upon your tax bill increasing every year. 

Currently, the plan is to “piggy-back” on existing bond taxes (which are going down) and keep the tax rate the same.  The difference will be used for the new bond, so that’s the basis for the claim that the tax rate stays the same.

Here’s the catch…

To deliver on that promise, this plan needs the overall value of the tax base to go up 6% to 7% every year for the next five years.  That’s a very ambitious assumption.  Call up any Realtor you know and ask them what they think about that.

Here’s the document that was presented to the Board of Trustees.  Note at the bottom that the source of the tax projections is Dallas ISD.

What does that look like?

The market needs to stay hot to make those increases are possible.  That’s a BIG “if” to base bond promises on.  If you take a flat historical average and project that out, you get a growing funding gap:

property-tax-chart1

property-tax-chart2

property-tax-chart3

What if the tax base values don’t go up as projected?  How will the bond be funded?

That’s an excellent question!  You should stop right now and zip your trustee an email with that question.

As far as I know, here are the options:

  • Bond doesn’t fund.  What about all those new schools, Pre-K classrooms, CTE programs and choice schools promised?  Plans will change and a lot of that won’t happen.
  • Board of Trustees will raise taxes.  They have the power to do that.

Can the Board take away or change the homestead exemption?  The exemption is set by the state, though the Board has the option to offer an alternative exemption of 10% of total value.

In fact, there is a constitutional change proposal sharing the ballot with the bond in November that wants to raise the exemption.  It’s based on two pieces of legislation that passed in the last session (SB1 & SJR 1).  If DISD has not already withdrawn the 10% alternative exemption, they won’t be able to until 2020 if this passes:

Proposition 1

It will raise the school tax homestead exemption from $10K to $25K and also limits school districts on how they recoup the lost income.  I am not clear yet on how that may affect bond issuances.  I’ll try to find that out, but in the meantime, here is a good summary of this by Texas A&M:

  https://www.recenter.tamu.edu/articles/research-article/property-tax-legislation-2015