When Texas school districts propose a bond election, one of the first questions they hear from taxpayers is:
💰 "Will this raise my taxes?"
It’s a fair question—no one wants an unexpected tax hike. But the reality is that many school districts can issue new bonds without increasing the tax rate by leveraging existing revenue streams and financial strategies.
Let’s break down some of the biggest myths and truths about school bonds and tax rates.
❌ Myth #1: All Bond Elections Automatically Raise Taxes
✅ Truth: Many school bonds are structured to keep the current tax rate the same.
Texas school districts fund bonds through their Interest & Sinking (I&S) tax rate, which is separate from the Maintenance & Operations (M&O) tax rate used for teacher salaries and daily operations.
If a district has expiring debt, rising property values, or a healthy debt capacity, it can issue new bonds while keeping the tax rate stable.
Example:
A district with $50 million in old bonds set to expire may issue $50 million in new bonds without changing the tax rate because the debt payments remain level.
❌ Myth #2: More Debt Means Higher Tax Bills for Homeowners
✅ Truth: Increased property values often help cover new debt without raising taxes.
In Texas, school districts rely on property tax revenue to repay bonds. As property values grow, the same tax rate generates more revenue, allowing districts to fund new projects without an increase.
Example:
If a district’s property values rise by 10%, it can collect more money at the same tax rate, which helps fund new bonds without impacting taxpayers.
Key takeaway: Rising values create financial flexibility for school districts.
❌ Myth #3: If the Bond Passes, My Taxes Go Up Immediately
✅ Truth: Bonds are issued in phases, not all at once.
Many people think a yes vote means instant tax increases—but that’s not how it works.
School districts don’t issue the full bond amount immediately. Instead, they issue bonds over time as funds are needed, aligning debt payments with expected growth.
Example:
A $200 million bond package might be issued in $50 million phases over several years, reducing financial strain and keeping the tax rate stable.
❌ Myth #4: School Districts Can’t Control the Tax Rate
✅ Truth: Financial planning and refinancing strategies help districts manage tax rates.
Strong debt management strategies allow districts to refinance older debt at lower interest rates, much like a homeowner refinancing a mortgage.
Districts also use callable bonds, which give them the flexibility to repay or restructure debt early, further protecting taxpayers.
Why This Matters for Texas Schools
Understanding these myths and truths is critical for school leaders, board members, and taxpayers. Many districts across Texas need new funding for new schools, renovations, safety improvements, and technology upgrades—but they also want to be fiscally responsible.
By leveraging debt management strategies, rising property values, and phased bond issuances, school districts can invest in better facilities for students and teachers—without unnecessary tax increases.
Final Thought: Voter Awareness is Key
If your school district is considering a bond election, education is essential. Voters should know:
✅ How the I&S tax rate works
✅ What factors influence tax rates
✅ How the district plans to manage debt responsibly
Texas school districts have a unique opportunity to fund critical projects without raising tax rates—but only if voters understand the facts.
Would you like to see a bond proposal in your district? Let’s connect!
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or finance advice. If you have any legal or finance questions regarding this content or related issues, then you should consult with your professional legal or financial advisor.
Commenti