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HB 506, a 50-cent debt test bill, by Representative Eddie Rodriguez was left pending by the House Public Education Committee, on Tuesday March 24, 2015. Several witnesses stated support of the 50-cent debt bill including the Austin Chamber of Commerce. Drew Sheberie with the Chamber stated the bill would help the Austin metroplex that is among the fastest growing in the country where many districts are at 45 cents or above. The limit is referred to as a 50-cent tax rate “test” because a proposed bond issue (in addition to existing debt for a district) must be certified by the Texas Attorney General’s Office as being fundable by a debt tax rate of no more than 50 cents (per hundred dollar valuation) over the payment term for a proposed bond issue. This is an issue that has significantly escalated in the past decade as Texas has experienced rapid population growth and is not expected to abate as Texas’ population is to projected to double in the next three decades.

One school district superintendent testified that shortening the amortization timeline from a 35-year bond issue to a 25-year bond issue could save taxpayers millions of dollars per bond issue over a 25-year payment period. As more school district bump or nearly bump the 50-cent ceiling, some school officials have testified in other hearings that the proposed payment horizon for a bond issue may have to be lengthened from 30 to 40 years, in some instances, to enable the district to pass the 50-cent test. Accordingly, the 50-cent debt test bill is being referred to as a fiscal efficiency bill.

I&S tax rates have increased significantly as state aid support for facilities has fallen by about 65 percent in the past decade, based upon an analysis of state aid revenues to debt-related expenditures in the Debt Service Fund. In school year 2004-2005, only four Texas school districts had an I&S tax rate of 45 cents or more. In the current 2014-2015 school year, 66 districts have an I&S tax rate of 45 cents or more. Because state aid funding levels for facilities have declined in total over recent fiscal year, funding for new facilities is now entirely a local taxpayer decision when casting votes for proposed bond referendums.

See the list below to see “Who are the 66 school districts that have an I&S tax rate of 45 cents or more in 2014-2015?”