Judge Fowler discusses tax policies and the effects on DeWitt County

Judge Fowler discusses tax policies and the effects on DeWitt County Kimber Mccrory Wed, 03/27/2024 - 05:27 Image

• This chart attempts to show how DeWitt County tax rates are affected when Mineral Values change so dramatically over time. CONTRIBUTED PHOTO

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At the Commissioners Court meeting held on March 11, Judge Daryl Fowler discussed some items with regards to the Annual Comprehensive Financial Report.

The $60,000 appropriation in the county’s current budget (fiscal Year 2024) comports with the $60,000 of outstanding debt owed to TXDOT in the 2023 Annual Comprehensive Financial Report. Judge Fowler stated, “Our original debt was $300,000 for the county’s share of expenses for moving and erecting new private property fences and moving utilities out of the expanded right of way acquired by TXDOT for the expansion of State Highway 72 from the Karnes County Line into Cuero.” “We were able to negotiate a five-year interest free payment plan with TXDOT. The $60,000 is our fifth and last payment.”

With respect to the school districts vs. County tax revenue, Judge Fowler says the State Tax Code stipulates how tax rates are calculated for taxing jurisdictions. “Gen-erally speaking, when property values increase on properties that are on the tax roll for the current year and the previous year, tax rates should decline.” he continued, “The opposite is true, as well. When property values decrease, the tax rates will rise.”

The public policy of the Texas Legislature limits tax revenue increases to no more than a 3.5 percent in a new budget year without a state-mandated local election if a taxing jurisdiction seeks more than a 3.5 percent tax revenue increase on properties taxable in both years. Prior to the 2019 Tax Code reform the limit was an 8 percent increase, and an election to approve a higher amount of revenue was not mandated. It was incumbent upon voters to circulate a “Tax Rollback Petition” calling for a local election to approve the higher amount of revenue under the old law.

School districts are governed by some of the above, but also by the Texas Education Code, and more specifically, by the section commonly referred to as the Robinhood Law. With exceptions, if the property values in a public school district raise more than $6,160 per student, then the district is considered “wealthy” and the ability to raise additional revenue is limited to using the revenue to pay for the Interest and Amortization of debt.

According to TEA website and Wikipedia, The Robin Hood Plan is a colloquialism given to a provision of Texas Senate Bill 7 (73rd Texas Legislature) (the provision is officially referred to as 'recapture'), originally enacted by the U.S. state of Texas in 1993 (and revised frequently since then) to provide equity of school financing within all school districts in the state of Texas. The plan is now codified within the Texas Education Code as Section 49.002.[1] The original bill was passed in response to numerous court rulings (both Federal and state, notably the Texas Supreme Court's ruling in Edgewood Independent School District v. Kirby) that previous financing schemes were in violation of the Texas Constitution's requirements regarding what constitutes 'an efficient system of public free schools' as that provision interacts with another provision prohibiting a statewide ad valorem property tax. Though the legislation has been revised since then, its basic premise remains the same: it limits both the amounts that school districts can both spend on public schools and the amounts that they can raise through locally assessed property taxes and further requires that any amounts in excess be 'recaptured' by the state and given to other districts which are unable to raise the required revenue.

Judge Fowler also stated, ”The explosion of debt in the school district in the county is attributable to the Robinhood Law which became applicable when Eagle Ford Shale mineral wealth raised the school’s revenue above the per capita limit. In contrast, the county was able to adopt tax rates that paid off outstanding debt and allow for the pay-as-you-go campaign to rebuild our county road system while the Eagle Ford Shale is still a vibrant and taxable oil and gas resource.”

“I have been working with members of the Texas Legislature seeking to amend the Tax Code and remove some of the volatility that energy producing counties experience with tax rates since 2013. Volatility in the price per barrel of oil (in the ground) can cause taxable Mineral Values to double one year and then fall by 50 percent the following year,” the Judge concluded.