The HISD school board voted last night to call a May 6 election to ask voters to authorize sending lower recapture payments to the state rather than face detachment of commercial property in July. A May 6 election must be called by Feb. 17. The swift timing allows the district to follow the deadlines set by the state and Harris County.
Due to fluctuations in the way the formula is applied by the TEA, the recapture payment has been reduced from $162 million to $77 million.
Trustees Wanda Adams, Rhonda Skillern-Jones, Anna Eastman, Mike Lunceford, and Holly Maria Flynn Vilaseca voted for the approval of election. Trustees Diana Dávila, Jolanda Jones, and Manuel Rodriguez did not vote in favor of the item. Trustee Anne Sung abstained from voting. The ballot item in May, if passed, would stop the detachment and reassignment of commercial property and authorize the district to send lower recapture payments to the state than those earlier projected. If the measure fails, detachment would begin in July of 2017, unless the Legislature takes action before it adjourns on May 29.
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The recent news that the state Senate Finance Committee has charged a study team, led by Senate Education Committee Chairman and Friendswood Republican Larry Taylor, to devise a new, equitable school finance system for Texas was encouraging to HISD board members. While the Texas Supreme Court upheld the current school finance system as constitutional last May, the court also said it was in dire need of fixing.
“Everyone is tired of having a convoluted system,” said HISD board member Anna Eastman of the increasingly complex formulas the state uses to figure out how much money each school district should receive. “There needs to be a system a lay person can easily understand. The Supreme Court has left the door open to doing something totally different.”
In the meantime though, Houston is still in Recapture – meaning that in the current system, HISD is considered “property wealthy” and is subject to sending $162 million in local property taxes to the state. In the November elections however, voters said no to recapture, and HISD will now be subject to the detachment of about $18 billion worth of commercial property within district borders starting in July 2017.
That’s partly why HISD board members Anna Eastman, Wanda Adams, Rhonda Skillern-Jones, and Mike Lunceford, along with Superintendent Richard Carranza, Houston ISD counsel David Thompson, and HISD’s Government Relations Director Ashlea Graves went to the state capital last week to meet with Larry Taylor, Lieutenant Governor Dan Patrick, and Speaker of the House Joe Straus, among others.
“We want to be a part of conversation,” said Eastman. “As Houston goes, so goes the state.”
Another purpose of their meetings was to make recommendations of how to get Houston out of recapture so it wouldn’t be subject to the Robin Hood rule.
“The things we talked about were more of a short term fix in the current system,” said Eastman. “Maybe not this session, but ultimately they’ll come up with better solution.”
These interim remedies including raising the basic allotment per student, currently at about $9,000 per student; calculating the Homestead tax exemption for HISD homeowners on the full value of the property; counting full day Pre-K children as part of the daily attendance counts – because currently the state only funds a half day for students and HISD picks up the rest of the tab; and asking for a Transportation allotment because if Houston does go into recapture that funding for buses will be lost.
“The remedies we are asking for are not exclusive to Houston,” said Eastman.
As for what will happen on July 1 when properties are scheduled to be detached, Eastman said she has not heard of any specific movement on the behalf of businesses to sue the state to prevent the seizure. The concern of many is the permanence of the detachment of commercial properties for the purposes of taxation.
Eastman did note the action of State Representative Jim Murphy who filed HB 1059 on January 17 relating to the reattachment of property detached from a school district by the Texas Commissioner of Education. “If property can be detached from an ISD, certainly the reversal of those circumstances should cause the reattachment of the property to make an ISD whole,” said Murphy in a press release. “The remedy here is to balance the detachment process so that the TEA has the guidance to manage the changing environment of school finance.”
Senator Paul Bettencourt who represents Senate District 7, including portions of Harris County is a member of the Senate Education Committee who thinks that Houston’s vote against recapture was a big mistake.
“It’s a lose, lose, lose situation,” he said. “The public was not well informed. The board set the election and said ‘go vote no’. The Texas Commissioner of Education has no choice but to detach come July.”
Recently, he sent out a press release advocating what would essentially be a do-over vote for the city.
In the release, Bettencourt detailed the three ways he says the city would lose. The first is that de-annexed taxpayers will see their Maintenance and Operations (M&O) property tax rates rise by 15 cents. The second is that the existing HISD taxpayers will have to make up their Interest and Sinking (I&S) property tax debt rate that goes up two cents to make up for the departed de-annexed commercial taxpayers.
“The final ‘lose’ is that HISD permanently loses $17.4 billion dollars of their tax roll that can’t be replaced easily per the TEA Commissioner, if at all,” Senator Bettencourt noted in the release. “The way to fix this is obvious: HISD trustees need to schedule another HISD recapture vote in May.”
Bettencourt said that there was a precedent for this in Galveston HISD, who had voted against sending the recapture payment in 2006 and then scheduled a revote to accept it.
“You leave no vote intact and nothing good happens,” said Bettencourt. “Once you are two years in new district it’s hard to pull out.”
Bettencourt said that the Texas Education Agency is still working on the list of Houston commercial properties to be detached, and that he hasn’t seen it, but that it would be a top down procedure with the most profitable companies first.
“There are a lot of unknowns,” said Eastman of the current situation. “The board hasn’t met yet.”
Of the bigger picture though she says she is hopeful.
“I get the sense that there’s a sincere desire of legislature to get it right,” she said.