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Buna ISD Tax Swap

BUNA ISD ‘TAX SWAP’

Buna ISD Board of Trustees Calls Election for a ‘Tax Swap’ with NO increase in the local $1.49 tax rate. 

The election is called for August 16, 2016 at the BISD administration office with early voting from August 1 through 12.  Officially called a Tax Ratification Election (TRE), the proposition is to allow the district to re-allocate the collection rate between Maintenance and Operations and Interest & Sinking.  Currently the $1.49 tax rate is split as $1.04 (M&O) and $.45 (I&S).  Passage of the proposition will allow the split to be $1.17 (M&O) and $.32 (I&S).  Therefore, there is no additional burden on the local tax payers as a result of passing the proposition.

The purpose of this re-allocation of the tax rate between M&O and I&S funds is to maximize state matching funds based upon local tax effort.  The state matches local tax effort on the M&O fund at a much higher level than on the I&S fund.  The total net increase in state funding after the debt retirement has been met will be in excess of $500,000.  Given the loss of enrollment and the loss of tax revenue due to loss in mineral values in the district, the additional state aid will allow the district to adopt a balanced budget for 2016-2017 without further cuts in programs and staffing. 

The timing of this effort is related to the fact that all the bond obligation ($20 million) approved by voters in 2013 has now been issued to fund the new High School and the new construction/remodel of the old HS for Junior High.  The state matches the I&S tax effort up to $.29 cents of local effort, and will continue to do so.  The remaining $.16 cents in local effort is not matched by the state so moving $.13 to the M&O fund does not cause a loss in state funding for I&S effort but it does earn state matching funds on the M&O tax effort.  The $.13 plus the current $1.04 M&O rate takes the district to the state limit of $1.17 in M&O tax rate while leaving the I&S rate at $.32.

The total tax rate has been $1.49 and will remain at $1.49 even should the proposition fail.  With passage, however, the district realizes a net gain in excess of $500,000 to complete the efforts over the past two years to bring the M&O budget into balance.

 

 

 

FREQUENTLY ASKED QUESTIONS

  1. What is our current tax rate for 2015-2016?

Total tax rate; $1.49, allocated as $1.04 Maintenance & Operations; $.45 Interest & Sinking.

  1. What will the tax rate be if the ‘tax swap’ passes?

Total; $1.49, allocated as $1.17 M&O, and $.32 I&S.

  1. What will the tax rate be if the ‘tax swap’ fails?

Total; $1.49, allocated as in 1 above.

  1. What is the benefit of reallocating the tax collections?

State funding increases to match the tax effort on the M&O to provide funds to retire the debt covered by the $.13 and still leave a net gain for the Operating budget of over $500,000.

  1.  What are the consequences if the proposition fails?

The district will be forced to adopt a deficit budget (2016-2017) again and the only remedy left to allow a balanced budget in the following year (2017-2018) will be to cut programs and staffing dramatically. 

  1. Why did we wait until this year to call the election?

The district needed to complete the sale of the $20 million in bonds to establish the full tax obligation ($.45) in order to move $.13  out of the I&S rate without causing a reduction in state matching funds on the I&S tax effort.  The state matches the local effort up to $.29.  This will leave only $.03 in local tax effort unmatched by state funds.

  1. Does this have any bearing on my property value?

NO.  Absolutely not.  Property values in Texas are controlled under state law and are driven in large part by sales.  The state Comptroller’s office monitors and assigns values to each county and the local county appraisal district also sets values.  If the local values fall below the state’s assigned value the local appraisal district appeals to try to keep the local value as they are set by local appraisers physically inspecting property.  The Comptroller’s office is relying on sales values without benefit of inspection.  Taxpayers can appeal their values to the local appraisal district. 

The school district has NO role in setting property values.  However, if the state determines that the local appraisals are artificially low, the state funding for the schools in that county are severely reduced.  Therefore, it is very important for the local appraisals to be as accurate as possible.

  1.  Does this election have any bearing on my existing exemptions?

No. 

  1. When and where will the election be held?

August 16, 2016, with early voting from August 1st through August 12th, with all voting taking place at the Buna ISD Administration Office.

  1. Why should one vote YES on this proposition?

To maintain an educational program that properly serves the children of the 200+ square miles of Buna ISD.  Without the additional funding the district will be forced into a ‘Financial Exigency’ and subsequent ‘Reduction in Force’ that will cripple current programming.  This kind of event inevitably results in a decline in the quality of the school and ultimately in the vitality of the community it serves.  The effect will certainly be negative on real estate, business interests, and the future of Buna.

  1. Under what conditions could the $1.49 tax rate increase?

A drop in the district’s property values could cause the I&S tax to rise to meet the debt requirements.  Likewise, an increase in values could lead to a reduction in the I&S rate.  At this time, mineral values have almost bottomed out so the likelihood of significant further loss in values is very small.  All other property values are holding or rising.  This scenario exists regardless of the tax swap election or its outcome.

  1.   How long will the ‘tax swap’ last?

Until the bonds are retired (15 years at the minimum).  Of course, it is always possible that the state could change the system of school funding and set up a new tax structure, however, given the loss in state revenues as we approach the next session of the legislature, this too seems highly unlikely.  Such changes could occur regardless of the tax swap election or its outcome.

 

Tax Swap election 06302016.doc

Tax Swap FAQS 06302016.doc

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