Bills help schools get tax revenue back
Legislation aims to give Texas school districts a way to reclaim property taxes lost to poorer districts.
New legislation would give Texas school districts a way to reclaim property taxes lost to poorer districts under the so-called Robin Hood school finance system.
The bill’s sponsor, state Rep. Jim Murphy, R-Houston, said the measure introduced this week is intended to help school districts across the state and protect taxpayers whenever tax revenue from valuable commercial properties is taken from one district and sent to another via a system known as recapture.
The Houston Independent School District is facing such a scenario after voters in November decided against sending a separate $162 million recapture payment to the state, triggering a process whereby the Texas Education Agency may “detach” commercial properties and reassign their associated tax revenue.
Mayor Sylvester Turner and HISD trustees had urged voters against approving the recapture payments in hope the Legislature would use the time to overhaul Texas’ school finance system.
Murphy’s proposed legislation does not address the larger issue of school finance reform.
“We are working on school finance,” the west Houston representative said. “How far we get, all of that remains to be seen.”
His bill, HB 1059, addresses the fact that there is no statute for “reattaching” property that has been detached should changing circumstances warrant. It “would establish a mirrorimage process for reattach-
ment,” Murphy said.
“If we’re going to have this process, we need to have a way to reverse it,” he said.
Districts across the state make recapture payments to the Texas Education Agency each year.
However, a majority of people who live within the Houston Independent School District voted against paying the state. In July, the Texas education commissioner is expected to begin detaching the most valuable properties within HISD’s boundaries.
A list has not been made available, but some of the highest-valued buildings include Williams Tower near the Galleria, the Anheuser-Busch InBev brewery on Houston’s east side and scores of skyscrapers.
“It will affect a number of downtown properties,” said Bob Eury, president of downtown business group Central Houston and executive director of the Downtown Management District.
The taxable value of the property to be detached is estimated to be $17.4 billion, according to a letter sent to HISD in December from Education Commissioner Mike Morath.
A TEA spokeswoman said the agency is still working through the process and details would be forthcoming.
HISD is considered a wealthy district even though nearly 80 percent of its students come from low-income families.
The district said it was forced to cut $95 million from its budget.
Before the vote, a commercial real estate trade group came out in favor of HISD making the recapture payments.
The Building Owners & Managers Association said landlords could face an unfair competitive advantage if they are paying a different tax rate than their neighbor.
The group declined to comment on the proposed legislation Thursday.
Eury wondered how HISD would fill its revenue gap should the properties be detached.
“As time goes by, does HISD have to raise its rate?” Eury said.
Detachment has other implications to property owners remaining in the district, Murphy said.
“When the property leaves the district, the district loses both maintenance and operating taxes and bond taxes, which means the cost shifts to all the other owners,” he said. “We want to try to remedy that as soon as economic conditions warrant.”
There are other questions should the detachments go through. If an apartment complex within HISD is reassigned to another district, for example, would the children who live there then attend a different school?
Murphy’s bill says a student in that situation may choose to attend school in the district to which their property is annexed.
It also says detached property would be released from the obligation for any tax to pay principal and interest on bonds authorized by the district before detachment.