The state requires that a school district make the statement that it “adopted a tax rate that will raise more taxes for maintenance and operations than last year’s tax rate” if the school district adopts a tax rate greater than its effective tax rate (According to the Truth in Taxation Guide for 2008, “The effective rate is a calculated rate that would provide the school district with about the same amount of revenue it received in the year before, on properties taxed in both years. If property values rise, the effective rate will go down and vice versa.”) For the 08-09 school year, the effective tax rate for EISD is $1.14. The adopted tax rate is $1.2580. This explains the need for the first statement.

The second statement seems to contradict the first statement. “The tax rate will raise taxes for maintenance and operations on a $100,000 home by approximately $0.00.” How can EISD adopt a rate that in one statement increases the amount of taxes raised for M & O and then publish a statement that the taxes owed on a $100,000 home will not change?

The state requires a district to publish a statement that compares last year’s M & O rate with the adopted M & O rate and make a statement that the adopted M & O rate will raise more taxes and include an example based on a $100,000 home. However, the $100,000 home’s value stays constant through the two years. This fact causes some unexpected calculations to occur.

Eustace ISD offers a 20% Optional Homestead Exemption. This exemption is in addition to the regular $15,000 homestead exemption. Below are the calculations that arrived at the change of $0.00:

2008-2009

To calculate the approximate amount of maintenance and operations taxes owed on a $100,000 home, do the following:

20% x $100,000 = $20,000 (optional homestead exemption 

$100,000 - $20,000 = $80,000

$80,000 - $15,000 = $65,000 (regular homestead exemption)

$65,000 ÷ 100 x 1.04 (adopted maintenance and operations tax rate for 08-09. Note that the M & O rate did not change from 07-08. It stayed constant at $1.04.

$676.00 (Maintenance and Operation Taxes owed on a $100,000 home for 08-09)

2007-2008

Last year’s maintenance and operations tax rate was also $1.04. The calculations would be as follows:

$65,000 (same as above on exemptions) ÷ 100 x 1.04

$676.00 (Taxes owed on a $100,000 home for 07-08).

So, on a house that was valued at $100,000 last year and the same house that was valued at $100,000 this year, the taxpayer would not see any change in the amount of taxes owed for maintenance and operations of the district. However, this presents a somewhat unrealistic picture. A home valued at $100,000 last year will probably not be valued at $100,000 this year. In fact, according to the appraisal district, the average market value of a residence in EISD is currently $102,061. In 07-08, the average market value of a residence in EISD was $97,861. Naturally, when the average value of a home in our district increases by $4,200 and the M & O tax rate stays the same, the average home owner in our district can expect to see a small increase in their tax statements.   

This is the amount of maintenance and operation taxes. This does not include any voter approved tax rate for bonds.

In summary, EISD adopted an M & O tax rate that was exactly the same as last year’s. However, if we include the tax rate for the bonds (which is called interest and sinking, or I & S for short), and compare those with last year’s tax rate, we see the following:

                                    M & O                         I & S               Total

07-08                           $1.04                           $.22804           $1.26804

08-09                           $1.04                           $.21800           $1.25800

Difference                     $0.00                           $.01004           $  .01004