Officials debated the pros and cons of cost-saving measures and increasing tax rates and revenue during a joint discussion between Hutto ISD and City Council.
Glenn Graham, HISD Chief Financial Officer, gave a presentation during a June 10 meeting on the Hutto school district’s finance and tax structure, as well as the effect it has on the residents.
Graham said the school district determines its tax rate through two rates: maintenance and operations, and interest and sinking. Maintenance and operations, or M&O, pays for the maintenance and operations of facilities. Interest and sinking, or I&S, pays for debt obligations on voter approved bonds.
The I&S rate cannot exceed $0.50 of $100 in property value and has to bring in enough revenue to cover voter approved bond debt, he said. The M&O rate is determined by state law, and the district could lose state funding if the rate decreases. The 2020-21 I&S rate is $0.46 per $100 in property value. The projected 2021-22 M&O rate is $0.96 per $100.
During the presentation, Graham showed how lowering the projected M&O rate by $0.05 would reduce state aid by more than $215,000 and lower the district’s total tax revenue by roughly $2.5 million.
Despite those projections, Mayor Mike Snyder raised a concern that businesses might be deterred from coming to Hutto because of the higher combined school district tax rate compared against other municipalities, such as Round Rock, Georgetown or Leander.
Waiting an extra year to save money for projects such as a stadium renovation could ease the tax burden, he said.
Although the rate may seem high, Graham said once a business is established in the city it would raise the tax base and spread out the burden, allowing for a reduction.
With the district’s projected growth in the coming years, starting with an around 11% increase in the next school year, waiting to build new facilities is not possible, Superintendent Celina Estrada Thomas said.
“In four years we will need another elementary school,” she said. “We’re going to have to put the children somewhere.”
Council Member Robin Sutton said past city management approved the residential developments bringing in families with children, whom the district must accommodate.
“We talk about the high tax rate of the ISD, and I know it’s a burden on a lot of Hutto taxpaying citizens, but it’s decisions by the city that have made this situation where we have to accommodate children,” she said.
