The blanket Texas homestead exemption, which lowers the taxable value of a home, has risen from $15,000 a decade ago to $140,000 today, with larger amounts for seniors and people with disabilities. The state is supposed to reimburse school districts out of its surplus for the school property tax revenue those exemptions remove, an arrangement known as a hold harmless payment. Districts told Texas Public Radio that the reimbursements do not always cover the gap.
In a report by Bill Zeeble of KERA that Texas Public Radio published Thursday, Plano ISD deputy superintendent for business operations Johnny Hill put his district’s shortfall under the latest bill at $2 million to $3 million because of gaps in how the reimbursement is calculated. Texas Education Commissioner Mike Morath told lawmakers that about a dozen districts were tens of millions of dollars in the hole because of hold harmless errors and that the state had overpaid them and must recover the money. A study from the office of state Sen. Paul Bettencourt, a Houston area Republican, found that nearly 1.5 million Texans now pay no school property taxes at all, while state Sen. Molly Cook, a Democrat, argued that the underlying problem is school underfunding rather than the tax cuts themselves. Thomas Brosy of the Urban-Brookings Tax Policy Center told the station that replacing the lost revenue outright would likely require a large sales tax increase, because Texas has no income tax.
No Lake Houston area district is named in the report. It matters here because Humble ISD, New Caney ISD and Sheldon ISD are all funded through the same state school finance formula and the same hold harmless arrangement the story describes.
