AUSTIN, Texas - Nearly $4.24 billion in school district bonds is on the ballot this November, and Austin ISD’s bond proposal is the largest package. The price tag is just under $2.44 billion.
"As a district, we know that we have for over $4 billion in deficiencies," said Eduardo Ramos, chief financial officer for AISD.
If passed, AISD’s 2022 bond would address those deficiencies.
"We understand that property values are continuing to grow in the Austin area, and affordability is an issue," said Ramos. "But one of the things I will say is that there are student needs throughout the district, and our facilities are continuing to age year by year and those needs do not go away."
AISD has broken down the bond into three propositions that voters will see on the November ballot.
- Proposition A directs $2,316,025,000 towards general security and facility upgrades.
- Proposition B would utilize $75,541,000 on technology upgrades.
- Proposition C asks for $47,434,000 for athletic facility improvements.
"We would be able to spend less on repair costs and that would allow us to use those operating dollars towards teacher salaries and staff compensation," said Ramos.
"The proposed bond package is expected to raise the debt service portion of the school tax rate by one cent per $100 in taxable value. However, Austin ISD plans to reduce the maintenance and operations portion of the school tax rate by 6.5 cents this year because of rising property values. This bond proposal will not affect the tax rate reduction for this school year, and property owners are expected to see an additional estimated 3-cent reduction in the school tax rate next year, for a total reduction of 9.5 cents over the next two years," AISD stated.
But Roger Falk with the Travis County Taxpayers Union believes the promise is misleading.
"They’re telling everyone it's only a penny," he said. "It's going to be at least ten times that."
Falk looked at the latest report from the Travis Central Appraisal District. It shows roughly $143 billion in taxable value within AISD’s district for 2021. The 2022 report has not been released, but Falk factored in estimated increases in property values.
"When you calculate the cost of a bond to the public, the first thing you have to do is see what the payment is, then you take that number and set it against the tax base for the school district in this case - how much you have to hit that with in taxes to get that payment," he said. "Well, when you calculate the one cent that AISD is claiming, that raises about $17 million a year."
He said that’s nowhere near enough to pay back the $2.44 bond within 25 years, which is the maximum amount of time AISD has even factoring in growth.
He noted federal interest rates are trending up and that taxpayers are still paying off AISD’s last bond from 2017. Ramos confirmed with FOX 7 there is about $1.4 billion in current debt from the 2017 bond.
"AISD has $1.4 billion in current debt that they are taxing 11.3 cents to pay," said Falk. "So you're looking at $2.44 billion, and they're saying a penny, and they've got $1.4 billion on the books, and they're paying 11 cents, you can quickly see that that penny is just silly."
Ramos says it’s important to keep in mind that the $2.44 billion bond will be sold over a six-year period, not all at once.
"What that allows us to do is manage that one penny tax rate increase over the six years," said Ramos. "It's the most fiscally responsible means of managing bond debt."
AISD has 25 years to pay off the bond but could pay it off sooner. Ramos noted that AISD is the only school district in Texas to receive two AAA bond ratings, which "indicates the lowest risk of default and ensures that the district will get the lowest interest rates when taking on debt."
But Falk said, ultimately, it's not enough.
"AISD is going to say, well, we're not going to put all the bonds out at one time, or they're going to say the tax base is going to grow, and those are reasonable claims, however, those claims are not anywhere near enough to close the gap between one cent and ten cents," said Falk. "It's going to raise taxes higher than any tax increase we've ever had, and rents are going to go up as a result."
Ramos said AISD did factor in appropriate growth when calculating the tax rate increase.
"We still believe we were very conservative in how we determined these calculations, for example, for this one penny tax rate increase assumption, we assumed that our property values in total as a district would grow by 7% over the next two years and then 2% for years three through nine," said Ramos. "To give a reference point, this year our property values grew 18%."
To learn more about the bond proposal, click here.
According to the Travis County Tax Office, if passed, the proposed tax rate increase would not go into effect until 2023. For property owners interested in looking at how their property is taxed, click here.