Round Rock ISD officials are moving forward with a proposed tax exemption meant to spur business growth in the city.

Several members of RRISDs board of trustees say a better economy will in turn lead to better schools. The board met April 2 to consider a Freeport property tax exemption, which, if passed, would take effect in the 2015-16 school year.

Randy Staats, the district’s chief financial officer, explained the exemption would apply to companies with inventory that is brought into Texas for manufacturing and exported out of the state within 175 days.

Passage of the exemption would remove nearly $420 million from the tax roll, Staats said. But, he said, companies often sign Payments in Lieu of Taxes, or PILOT, agreements, making the change revenue neutral in the first five years of the exemption, he said. The average homeowner would likely pay about $1 more each month, he said.

Property taxes are a critical revenue stream for the general operating fund, and 28 percent of the property in the city is zoned commercial, Staats said. Forty companies in the district manufacture Freeport goods, including Dell, Flextronics and TECO-Westinghouse, he said.

Passage of the exemption would likely draw more businesses to Round Rock, putting the city on the same playing field as surrounding cities that already have the exemption in place, Staats said. It would also reduce the likelihood of existing companies relocating, he added.

Other school districts with the exemption include Leander, Pflugerville, Hutto, Manor and Del Valle ISDs. Local cities and counties have also instituted the exemption, including Travis and Williamson counties and the cities of Round Rock, Austin and Leander, Staats said.

Trustee Terri Romere was immediately in favor of the exemption. She said when Leander adopted the exemption, business exploded in the area.

“That’s where Round Rock’s saying, ‘Hey, we need to pick up the steam,’” she said.

The exemption will encourage business and housing growth, she added, seeing "it as pro-community, a definite win for Round Rock.”

Board Secretary Paul Tisch asked what would happen if companies default on their PILOT agreements. Staats said the board could then take legal action against the company.

“It’s just like any other contract or agreement,” he said.

Tisch ultimately favored the proposal, saying great schools are a draw for businesses, and economic growth gives birth to better schools.

Trustee Suzi David and board Vice President Pauline Law also favored moving the proposal forward.

Board President Charles Chadwell said he wanted more information about the exemption before he would offer his support. He said the exemptions in Manor and Leander school districts have not helped the schools get out of financial straits. He also said the change would mean taxpayers owe more.

The board did not take any official vote on the issue. Trustee Nikki Gonzales and Superintendent Steve Flores did not express support or opposition to the proposal. Trustee Diane Cox was absent. Staats said the board would revisit the issue and take action on the exemption in late May or early June.