Cy-Fair ISD trustees renewed for another year the district's optional 20 percent homestead exemption June 28 at a special-called meeting.
The exemption, which gives homeowners within the district a 20 percent reduction in property taxes, amounts to $3.5 billion in taxable value and $37 million in maintenance and operations revenue. The district's board of trustees must make any changes to the exemption by July 1 of each year.
Several questions on the effects on the district's finances in regards to retaining the homestead exemption were asked of Stuart Snow, associate superintendent for business and financial services.
Going forward there are two options to increase operating revenue for the district, he said. Trustees can decide each year to keep, eliminate or reduce the optional homestead exemption, or the district can hold a tax ratification election to increase the maintenance and operations tax rate to $1.17. The homestead exemption would provide $36 million of tax revenue, and the tax rate change would provide an additional $56 million in annual operating income to the district, Snow said.
There are two types of exemptions school districts in Texas can provide to homeowners: local and state options. Taxing entities are required by law to offer the state exemptions. Local options are also allowed by law, but taxing entities can choose whether or not they want to provide them to homeowners.
Several school districts in Harris County offer an optional homestead exemption, including Houston ISD, Pasadena ISD, La Porte ISD and Spring Branch ISD. Katy ISD and Klein ISD, CFISD's neighboring districts, do not offer a local exemption. About 218, or 20 percent, of the state's school districts offer a local homestead exemption.
The financial impact of the optional exemption has a greater effect in CFISD due to the school finance system, but also because of the area's number of residential homes.
"Our mix of property values is greater at the residential level," Snow said. "About 60 percent of our total taxable value is in residential homesteads. As we look at other districts and compare their mix of values and how their residential values stack up against total value in the district, we have a greater percentage of residential homesteads."
Although the district has testified during previous legislative sessions regarding the inequity in the school finance system, legislators implied an optional homestead exemption was hindering local property tax collections.
"Every time we went to Austin last session and were testifying to either the house or senate education committee regarding inequities in the school finance system, they always asked if we had an optional homestead exemption," Snow said. "They were implying that we didn't have an argument when we went to Austin to ask for a better system or more equitable finance system, because we were not maximizing our tax collections."