School bond elections are the means by which public schools ask voters to consider allowing the district to sell bonds to help pay for capital improvements, new construction, land, school buses, technology and maintenance for aging facilities.
If the proposed bond propositions are approved by voters, the district borrows money to complete the projects and pays the money back with interest over time, similar to how an individual borrows money and makes payments to buy a car or build a house.
If the proposed bond propositions are not approved by voters, the school district may have to do without the new classrooms and improvements, tap into other sources like fund balance and the daily operations budget to pay for projects or defer the projects until another election can be called. The State of Texas does not provide enough funding per student for school districts to pay for new construction and deferred maintenance. And, if a district is experiencing enrollment growth, portable buildings may have to be considered for purchase or lease if bond funds are not available for use to manage growth.
The average BISD homeowner, who applies for the Homestead Exemption on their primary residence, would see an overall tax bill decrease if the exemption passes in the November election.
The owner of an average $253,063 home would see a $39.28 monthly decrease.
November Ballot Contains Property Tax Relief Proposal
In addition to the proposed BISD bond measure, voters in the November election will find a Constitutional Amendment on the ballot that increases the Homestead Exemption from $40,000 to $100,000, bringing property tax relief to homeowners statewide.
If both the Constitutional Amendment and the school bond propositions are approved, it would still result in an overall decrease in the annual tax bill for residential taxpayers.
The average value of a BISD home is currently $253,063. If both the Homestead Exemption and all proposed bond propositions pass, the owner of an average BISD home would see a $39.28 monthly decrease.
- The owner of a $200,000 home would see a $44.06 monthly decrease.
- The owner of a $400,000 home would see a $26.06 monthly decrease.
- The owner of a $600,000 home would see a $8.06 monthly decrease.
Homeowners 65 years of age and older are not impacted by the school bond election if they have filed for their senior citizen homestead exemption.
School bond elections impact the interest and sinking side of the school tax rate, not the maintenance and operations side. In addition, it is important to note the following facts:
- Voters will be able to consider each proposition separately.
- If one or more of the bond propositions pass, the bonds will not be sold until the funds are required for a capital project.
- Short-term projects will be financed only through short-term bonds.
Understanding how public school finance works
A school district’s total tax rate is primarily funded by local property taxes and made up of two parts: Maintenance and Operations (M&O) rate and Interest and Sinking (I&S) rate. Each has a designated purpose and budget.
The M&O budget is used for the daily operations of the district: utilities, salaries, supplies, food and gas, etc.
The I&S budget is used to repay debt for capital improvements through voter approved bonds: new construction, renovations, additions, HVAC and roofing replacements, electrical systems safety and security and technology, etc.
Bond elections only affect the I&S tax rate. Proceeds from a bond CANNOT be used as part of the M&O budget, or to increase salaries.
Under state law, as long as a homestead and over 65 exemption application have been filed with the local appraisal district, 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, increasing the overall value.
While Bridgeport ISD’s tax rate is the lowest in 31 years, home values have risen. So does this mean Bridgeport ISD receives more total revenue as a result? No. The Texas school finance system creates an inverse relationship between property value increases and state revenue. So, the Bridgeport ISD Maintenance & Operations budget does not benefit from increased tax value growth, but rather the state benefits by lowering its contribution to the District. The system creates a situation where taxpayers pay more in local property taxes while the state pays less.