'A hard, hard decision'

District, taxpayers debate homestead exemption


In a change of scenery, the Kilgore ISD School Board moved its meeting to the Kilgore High School Auditorium – the move proved necessary with more than 60 people in attendance.

The vast majority of the audience came to hear a discussion about the local optional homestead exemption, which the board eliminated in June 2015. The controversy over the move, which was also made by a couple dozen other school districts in the state, came when Texas Attorney General Ken Paxton released an opinion in March pushing districts to revert their local homestead exemptions to the level they were in 2014.

In Kilgore ISD’s case, that would be a 20 percent exemption.

The opinion came as a result of Proposition 1, which became part of the Texas Constitution in November 2015, and stated, “Subsection 11.13(n-1) of the Tax Code prohibits a school district, municipality, or county from repealing or reducing the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year.”

The same amendment increased the statewide homestead exemption by $10,000 – making it $25,000 instead of $15,000.

Board President Dereck Borders explained at the time of the vote in 2015 and at Monday’s meeting the board’s decision was to ensure the board retained local control over the exemption as taxable values continued on a downward trend.

The action in June 2015 passed with a 5-2 vote and board members echoed each other by saying the decision was to maintain local control.

“That legislation would require voter approval to become law, and such was placed on the November 2015 ballot for the voters of Texas to consider. Therefore it was our understanding that we would be able to remove our local exemption at any point prior to that election as the legislation was not law without a positive outcome to the vote,” Borders read from a prepared statement. “The appraisal district calendar for setting taxable values expedited that decision, necessitating a decision prior to July 1. Failure to remove our local homestead exemption prior to these dates would bind KISD into giving this exemption until at least 2019 if the measure passed.

“The potential also exist for the legislature to arbitrarily extend the ban on repealing this exemption further or even indefinitely. This in effect makes this a state exemption, not a local one… As a result, after careful thought, attorney consultation, advice from other legal firms and guidance from the Texas Association of School Boards and other industry experts, the board exercised the right to rescind the local homestead exemption with the expectation that failing to do so would bind future KISD boards on certain options to adequately fund the schools in time of need and effectively end local control of certain school finance options without any assurance from the State of Texas that they would rise to remedy those needs. Given the State of Texas’ dismal track record with regard to equitable and adequate funding for public schools, the KISD Board of Trustees did not want to further bind the district into relying on the state.”

In August, KISD Superintendent Cara Cooke said the district had begun using the money collected through the homestead exemption.

The move prompted taxpayer Dale Hedrick question the decision and ultimately request the board consider including the topic on Monday’s agenda.

Dr. Wayne Pierce, executive director of the Austin-based advocacy organization Equity Center, supported the board’s decision.

With the circumstances such that the decision had to be made by the July 1 deadline with decreased taxable values, nothing in law at that time prohibiting the board from eliminating the exemption and the funding system the way it is, Pierce asked the audience, “What would you do?”

“You’re going to act to protect the children.”

Pierce explained he believed the board acted “in a prudent manner” by making the decision they did and the state forced the issue by stating the local exemption would be frozen until at least 2019.

“What they’ve done by putting that in the constitution is ruined the local option homestead exemption because if you can get in and you can’t get out, that’s kind of like a mousetrap,” he said.

“I respect your opinion and I came to hear it… My whole point in this whole thing is back off, don’t spend this money, wait until it’s decided in the court,” Hedrick said.

Pierce said the attorney general’s opinion is not binding and is just that – an opinion. He agreed with Hedrick that it carried weight, though, and said he would not argue the point.

“But when it’s put out into the community in August that we’ve received no guidance from the state and I sit here and I had to go fishing (for information) and I find out two months prior we have a letter from the TEA and I’m saying, ‘Wait a minute, we haven’t had any guidance? I beg to differ with the superintendent on this.”

He continued to state the situation has been muddied by the different offices, agencies and organizations involved at the state level.

Even with the different opinions and statements, he said, “It’s still muddy, so let’s put the brakes on this thing and not spend this money. I asked Mrs. Cooke, let’s let this go through the courts. If the court rules that it’s legal and you can spend that money, then you’ve got the money to spend, but if the court comes back and says what you did, you erred; this goes back to the taxpayers. If you’ve already spent it, where are you going the money to pay the taxpayer back. You’re going to get the taxpayer to pay the taxpayer back.”

Borders explained he and other board members have received people expressing the opposite view telling district officials to spend the collected money prudently rather than sitting on it. Even if the district uses the homestead exemption money, he said, the district has money in its fund balance to pay taxpayers back if the courts determine the district must give it back.

Although $660,000 was the first number stated in June 2015 for the amount the district would collect by rescinding the local homestead exemption, that number has increased with the arrival of another tax season.

“You can see that in total for Kilgore ISD is not $660,000 it’s $1.4 million, almost $1.5 million… You can see of that $1.4 million, $1.1 million is general operating and $304,000 is debt services,” KISD Chief Financial Officer Revard Pfeffer said.

“This is such a hard, hard decision to make and riddled with so many different perspectives,” Cooke said.

“I hope they listened to everything, just like we’re trying to listen and take it all in totality and look at it from all perspectives,” she said following the conclusion of the meeting. “I know it’s hard. It comes with a lot of passion and it gets very personal talking about people’s money or kids, and we’re talking about both. I know the board’s very serious about their decisions. This was for the board mainly tonight too to be able to hear this information further and hear from community.”

Both Cooke and Pfeffer encouraged anyone to contact them at the district (903-988-3900) with questions about the district’s budget or the homestead exemption.


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