TAX NEWS - 2010

Texas Tax: Frisco ISD plans tax hike to pay down debt

Frisco's six new schools come at a price. District officials want homeowners to pay a higher property tax rate to reduce construction debt and balance a dip in property values.

The 3-cent boost would push the overall tax rate to $1.42 per $100 assessed valuation for the next school year. This represents a 2 percent jump, or $73 for owners of an average home in the district, worth $258,540.

The increase would not fund daily operations for schools but would go toward paying down about $425 million in outstanding bonds for school construction.

"We have been very fortunate," said Richard Wilkinson, assistant superintendent of facilities and finance. "We communicated that we would eventually have to raise the [debt service rate], but it has been gradual."

The board of trustees approved a 2-cent tax rate increase last year.

The district passed a $798 million bond plan four years ago to cover its exploding student population. Some additional payments carried over from a 2003 bond package. The district owes almost $79 million in debt payments for 2010-11.

The recession plays into the increase as well, Wilkinson said. Property values have decreased about 1.5 percent, cutting into the district's tax revenue.

But officials proposed the increase amid announcements of a balanced budget. The district began budget talks with a $10 million shortfall. Finance officials scrubbed it down by cutting excess maintenance services, minimizing new personnel and using federal funds to hire special-education staff.

"This is the tightest budget we have had in 17 years," Superintendent Rick Reedy said when the budget passed Monday night. "It's a good exercise for us though, and we're going to have to watch our expenditures closely. Who else in the state is opening six schools?"

The district won't formally adopt the tax rate until September, although next year's $292 million budget takes into account the revised rate. The daily operations tax rate component will remain at $1, the lowest in the region.

Frisco ISD's hike mirrors Plano's. The neighboring district plans to raise its overall tax rate 2.5 cents to $1.35 per $100 assessed valuation.

Allen ISD officials won't boost the tax rate this year but are considering going to voters in 2011-12 for permission to do so.

Allen ISD trustees also met Monday night and approved a $137 million general fund budget, with expenses outpacing revenues by $2.4 million. It's the third straight Allen ISD budget that has required dipping into reserve funds.