President's Blog

Jun 01, 2017

PAISD to ask for tax increase

Our school district, PAISD, is also facing some challenges in the next three school years. The fact that PAISD will be gaining some new taxable properties will put it in the “rich” school district category resulting in some tough decisions by the district and the voters. At the May board meeting of the Greater Port Arthur Chamber of Commerce Dr. Porterie, superintendent of PAISD, presented facts relating to a property tax increase election to be held in August 2017.

The proposed PAISD tax increase, of .13 per one hundred dollars, if passed, would result in an increase of approximately $100.00 on a home valued at $100,000.00. Voters will be asked to decide if the tax rate remains at 1.04 or increases to 1.17.  It would also result in an increase on our industries and businesses. While the chamber has a record of supporting our district, the issue is not clear. The more a school district collects in property taxes, the smaller the share of state aid it receives. High-wealth school districts are required to send some of their local taxes to the state to reduce the impact of their wealth advantage over property-poor school districts—commonly called “recapture” or “Robin Hood

Currently PAISD is not repaying recapture but is expected to begin for the 2019-20 school year under current law. The reason the district will exceed the per student wealth level is because Motiva and TEPPCO limitations expire after the 2017-18 school year adding more taxable property to the district. Please understand, lowering your tax rate does not lower your property wealth. Property wealth is determined by dividing the number of students into the total property wealth. If your student average exceeds an amount determined by the state you are a Chapter 41 district or a “rich” district and the voters must take steps to lower district property wealth.

The voters will have these 5 options available to reduce its property wealth. They may choose one or more of the following:

  1. Consolidate with another district
  2. Purchase attendance credits from the state
  3. Detach property
  4. Contract to educate nonresident students from a partner district
  5. Consolidate tax bases with another district

 

In the past, most Chapter 41 districts have chosen Option 3 or Option 4, or a combination of these options.  Please note, this election is not the tax increase election in August. This election will take place in 2020.  However, if the taxpayers fail to act, in 2020, the commissioner will chose for them. Typically, the commissioner chooses to detach property from the district. Currently there is no avenue through which the district can ever reclaim these lost properties should conditions change. Therefore, the best option, in 2020, is for the voters to simply send the state the money by choosing option 2. This allows us to reduce our wealth without detaching local property.

 

How does all this information help with the decision to vote for or against the 2017 tax increase? It doesn’t. Here is the scenario. Assume we vote to increase our school taxes from 1.04 to 1.17 for 2017 – 2018. In 2019 -2020, due to legislation, our taxes would automatically be reduced from 1.17 to .72. If we leave the tax rate at 1.04 it would drop to .62.  However, the next year it would return to 1.17 or 1.14 depending on our tax rate. In 2019 – 2020 voters must choose one of the property value reduction options and send approximately thirteen million to the state in recapture funds.

Our school district will be transferring wealth to the state or another district soon. I have learned the school district predicts, should the voters approve an increase to 1.17, five million additional dollars will be generated for PAISD budgetary needs. It is projected PAISD will be able to maintain this additional money each year through all the ups and downs of recapture.

We cannot predict a change in legislation, increase in property values or other factors that will increase or decrease school finance. As I stated before, the chamber must look at the effect on our local industries and businesses, which currently pay a substantial portion of the taxes for the area. Seniors are not worried because their taxes are frozen. In an effort to better understand the issue, I waded through a 50-page document on School Finance 101. A document filled with abbreviations, averages, school jargon and Austin dictated mandates and funding. I can see why PAISD would hire one of the best school finance agencies in the state, Moak, Casey & Associates to provide an analysis of the issue. It doesn’t matter how good Moak, Casey & Associates are at their job, they can only provide numbers based on known facts. They cannot predict the future.

On the emotional side, all of us want the best for our students. The chamber’s support of the recent bond issue is proof that we want the best for our children. Education is very important to economic development; however, the logical side has questions as to whether a tax increase is the answer. When you factor in that Dr. Mark Porterie is very trusted, by the business community, to spend the tax money in a fair and frugal manner it makes your decision more difficult.  Despite having a lot of talent on its board the chamber could not reach a decision, at this time. For this issue, the chamber asks our members to educate themselves, talk to their employees and vote their conscience. I want to be clear that Dr. Porterie did not lobby in support of or opposition to the tax increase but presented facts to explain the need.  Once the chamber has a few more answers we will have three options:

  • Take a position in opposition to the tax increase.
  • Take a position in support of the tax increase.
  • Take no position.

Currently the chamber has not made a decision on this issue. If you wish to share your opinion and you are a Port Arthur business or voter, you may communicate that decision to me through bmccoy@portarthurtexas.com. One last note, if you have a headache after reading and attempting to comprehend this article, join the club.

Recent Posts

Archives