Higher values and building boom create millions in additional revenue for taxing entities￼
By Kyle Mooty
According to public notices published in the Lockhart Post-Register headlined “Notice of Public Hearing on Tax Increase” it is projected that the city will collect an increase of tax revenue totaling 26.21 percent, or $1,297,051; and the county will collect a 9.74 increase of tax revenue totaling $1,915,925. The Lockhart ISD does not have to publish the “Notice of Public Hearing on Tax Increase”, but according to the resolution passed by the school board and their meeting minutes their projections are a 21.027 percent increase in revenue resulting in $4,115,923 of additional tax.
The Caldwell County Appraisal District has been busier than ever with the new tax rates proposed by the county, area municipalities, and school districts.
Perhaps nothing has been more confusing than the verbiage involved with Lockhart Independent School District’s proposed tax rate, including wording such as “Penny Put Back” and “Golden Penny,” although LISD Chief Financial Officer Nicole Dean went to great lengths to explain their meanings at the recent special called meeting of the LISD Board.
Meanwhile, there will be a public hearing for the City of Lockhart’s proposed tax rate on Tuesday, Sept. 6, beginning at 6 p.m. It is asking for .6006 as its new rate, or .0001 less than the Voter Approved Tax Rate (VATR) of .6007, meaning it will not have to go to Voter Approved Tax Ratification Election (VATRE) on the Nov. 8 General Election ballot.
Caldwell County Commissioners did not approve the tax rate at its recent meeting as was earlier published. Commissioners held a public hearing on the proposed tax rate and held a roll call vote afterward. However, action on the item was tabled after the auditor and the attorney for the county told the court that the tax rate couldn’t be passed until a public hearing was held on the budget. Commissioners approved revisions to the proposed budget, but a public hearing on the budget has not yet been held. County Judge Hoppy Haden said the public hearing would likely take place at the next regularly scheduled meeting of Commissioners Court on Tuesday, Sept. 13, beginning at 9 a.m.
Caldwell County will be proposing a .5532 tax rate, the exact same as its VATR.
LISD has a proposed tax rate of 1.1223 on $100 of value, which will require a VATRE since it a penny higher than the voter approved tax rate of 1.1123.
The LISD Board recently called for a $71 million bond election, noting that it already uses 14 temporary classrooms, and its various campuses are already at or above capacity.
LISD said that with voter approval, the “Penny Put-Back” would result in approximately $1 million in additional funding that the school district intends to use for school safety enhancements and competitive teacher pay.
Shanna Ramzinski, Chief Appraiser for the Caldwell County Appraisal District, said the VATRE is “an election that’s required by the state legislature to ask voters to approve a modified tax rate to increase revenue for teachers and staff to address continued school growth.”
LISD is actually under its VATR, but it goes over the VATR when adding its Maintenance and Operation (M&O) compressed rate through the Texas Education Association, according to Vicki Schneider, Deputy Tax Collector for the Caldwell County Appraisal District.
Taxpayers will pay much more if their property values are assessed at a higher level.
“There are different equations,” Ramzinski said. “You’ve got your market value, your assessed value, your taxable value, and you’ve got the tax rate.”
Schneider added, “If you don’t work in this, why would you understand it? And the legislature changes everything every 10 years.”
LISD explains proposed tax rate
Dean addressed the school board at Aug. 15 meeting at the LHS Gerry Ohlendorf Performing Arts Center. She noted what comprised the 2022 LISD tax rate.
“One, Maintenance and Operations Tax Rate: the district maximum compressed rate for the current year, and enrichment golden pennies, and two, Interest and sinking tax rate. There are two buckets. The first is maintenance and operations (M&O) tax rate which include district maximum compressed rate for the current year and enrichment golden pennies. The second is interest and sinking (I&S) tax rate. The M&O bucket is for salaries and everyday functions within the school district. The I&S bucket is to build the buildings we are in. M&O does not allow us to build buildings. When we need facilities, we have our I&S rate. Both of those buckets combined make up our total tax rate.”
Dean said the maximum compressed rate was set by the Texas Education Agency (TEA).
“The second portion is our golden pennies, which is also known as our enrichment pennies and that’s what makes up our total M&O tax rate that allows us to operate, keep the lights on, have employees, buy all the supplies that we need. It can only be changed by two ways. One, by TEA compressing the tax rate, and they compress that down when our property values go up. And two, through a voter approval tax ratification election.”
The I&S portion of the tax rate for LISD is used to fund the building of the schools, and when property values rise, it allows the district to go either for a decrease in the I&S rate or to pay down its debt.
“The district does have a history of holding the tax rate so that we can pay down additional debt,” Dean said. “We did a defeasance about 20 months ago that allowed for a $15 million savings over the life of the bonds for the taxpayers.
“So, we always want to either reduce that I&S tax rate or continue to pay down debt. We do have the lowest rate in the area, so we made the wise decisions to keep that rate low. As property values increase, we always need to increase our capacity, which means how much capacity we have in order to build a school at the lowest cost for the taxpayer. When we pay down debt again, that’s another opportunity to lower our I&S rate or continue to pay more of that down. We have that trend and grow our capacity, and with those two rates together are what make the total tax rate that would be for $100 of value within a home within Lockhart ISD.
“This is our tax rate history over the past five years. Since 2018 we have dropped by over 20 cents due to tax rate compression. Our maintenance and operation; we have that history of holding it steady, so I am proud to say we have the lowest debt around thanks to that wise decision.
At this time last year, TEA assigned LISD to a maximum compressed rate of 82.20 pennies, a portion of the district’s tax rate that is set by TEA. Dean said it was the lowest tax rate in the state. “That is the floor,” she said.
On July 25, TEA compressed LISD’s tax rate by dropping it another 1.74 pennies for a new maximum compressed tax rate of 80.46 pennies.
The LISD tax rate proposal would mean a .74 penny decrease in the M&O tax rate. This is where the Penny Put Back comes in. LISD Is proposing a penny put back (other districts have labeled it a swap) through its tax rate compression back into its M&O tax rate to assist with security, teachers’ salaries, and other operational needs within the district.
Dean noted that the M&O tax rate in 2021 was .8720 of a dollar. The proposed M&O tax rate for the 2022-23 school year is .8646, which is a proposed decrease in the M&O tax rate of .0074 pennies on $100 in value.
The VATRE would generate about $1 million on new revenue, about one-third gained from tax collections and two-thirds from state revenue LISD receives.
“The Golden Penny value increase with property growth increase each year if we have continued growth as well as enrollment each year,” Dean said.
Caldwell County Appraisal District tax collections would increase in LISD by more than $4 million, but Dean said LISD would be losing that same amount from state revenue.
“While we may have a 21 percent increase in the total tax collection, we have a 21 percent decrease in our total state funding,” Dean said. “Also, the 21 percent increase is not a 21 percent increase in taxes for a homeowner. It is 21 percent growth within the county, but it’s new business, new homes being built, and added appraised value of current homes.”
The proposed tax rate was approved 7-0 by the school board.
The wording on the Nov. 8 ballot mentions tax revenue of an addition al $4,115,923, but Dean said LISD would only get an increase of about $275,000 from those collections.
Appraisal District has record number of protests
Because of the rise in property taxes due to much higher appraisals, the Appraisal District has heard what Ramzinski said was a “record number” of protests. In fact, 1,100 cases had formal hearings before an Appraisal Review Board.
“We sent out a notice of appraised value in April and property owners had 30 days to appeal that,” Ramzinski said. “Property owners come in and they speak with an appraisal staff. We tried to have as much communication as we could, but because of time restraints and the number of our staff and the number of protests, if there couldn’t be a resolution between the property owner and an appraiser, they were scheduled for a formal hearing.
“We appraise property from the exterior, so there could be issues on the inside of a home that we’re not aware of. The property owner may come in and bring pictures of damage. Or, if it’s a real old property and we haven’t been able to do a physical inspection, some improvements might have been removed. We want to make sure that the appraisals are correct. Under some circumstances, we can make adjustments, just not on everything.”
The Appraiser Review Board is appointed by the Administrative Judge. There are citizens of Caldwell County on it. Those arguing against the appraisal bring up any evidence they feel is important to their case, including pictures of the property and perhaps damage. Ramzinski said if it was a recent sell or if they just purchased it for lower than what we have on it, they present their evidence. The Appraisal District will present its evidence. The Appraisal Review Board then makes a determination regarding what it feels the value should be.
The hearings wrapped up Aug. 26.
The tax levy process will take place beginning Oct. 1 and property taxes are due Jan. 31, 2023.