NBISD officials: Tax rate change would prevent budget shortfall

Since the adopted tax rate for fiscal year 2023-24 of $1.0419 per $100 valuation exceeds the voter-approval tax rate by 3 cents, New Braunfels ISD is required to hold an election for the new tax rate adopted by the board of trustees.

The state had a record budget surplus this legislative session that was partially used to fund reductions in school district tax rates and a proposed increase in the homestead exemption from $40,000 to $100,000. According to district officials, school district tax rates were compressed—or reduced—by as much as $0.18 per $100 valuation across the state.

If the VATRE is approved by voters in November, the tax rate for FY 2023-24 will be a $0.1535 reduction from the tax rate approved by the board last year, compared to an $0.1835 reduction if voters reject the proposition. Because lawmakers decided to compress, the taxpayer will see an average decrease of 14.63% on their tax bill, according to the district.

“The decision to call for the VATRE did not come lightly,” NBISD Superintendent Laurelyn Arterbury said. “Without the additional three pennies, the district would have a $4.5 million budget deficit if we continued to offer at least the same level of educational programming for our students.”

According to the language on the November ballot:

• The proposed tax rate of $1.0419 is 3 cents above the maximum rate without voter approval, and will fund staff raises and student programs.

• The legislature’s $18 billion tax relief package will allow taxpayers to see a 14.63% decrease in their tax bills, even though legal language of the ballot requires the wording to include “will result in an increase.”

• Because NBISD has not seen an increase in school funding and due to inflation, the district is facing a shortfall.

The backstory

An $18 billion tax relief package was passed by Texas lawmakers July 13 through Senate Bills 2 and 3. As a result of this, Lt. Gov. Dan Patrick said the average homeowner will save around $1,200-$1,450 on their 2023 tax bill. Voters will have the opportunity to vote on a constitutional amendment in the plan—Proposition 4—in the Nov. 7 election.

“While the tax rate has been reduced, NBISD has not seen an increase in school funding and, with inflationary impacts, is facing a deficit,” NBISD Board President Eric Bergquist said. “If the VATRE passes, the revenue generated will help maintain current academic programming and retain and attract high-quality staff.”

Put into perspective

State lawmakers have dedicated $12.7 billion to reduce school district maintenance and operations taxes, which make up the majority of the tax bill. Schools will receive funding from the state to ensure they do not lose revenue as tax rates fall, but NBISD is asking voters to approve an additional 3 cents to close the gap in their budget.

“Lawmakers have not raised the basic allotment, which is the minimum amount of funding per student that school districts receive from the state, since 2019,” NBISD Chief Financial Officer Paul McLarty said.

According to McLarty, the district will still see a $2 million shortfall for the 2023-24 budget if the VATRE passes. The district would propose to use the general fund balance—or funds left over from the previous school year—to meet the financial shortfall for the current 2023-24 fiscal year, a measure they do not plan to make on an annual basis.

“The district would need to consider options to reduce expenditures or find alternative revenue sources going forward if the state does not pass a school funding bill in a future special legislative session,” McLarty said.

If the local VATRE passes:

• The district will still see a $2 million shortfall.

• The district will propose the use of the general fund’s balance to meet the financial gap for FY 2023-24, according to the district.

• It would provide funding for educational programs, including programs originally paid for with COVID-19 funding, according to the district.

What’s next?

Voting locations and information about the Nov. 7 ballot can be found online at ore information on the VATRE election can be found online here. More information on the VATRE election can be found at www.nbisdnews.org/elections.

“It’s important to remember that in this voter-approval tax rate election, we’re giving the choice back to our stakeholders,” NBISD Board Secretary Steve Minus said. “We encourage everyone to participate in the upcoming election.”