Kilgore ISD has lost an appeal in a legal case stemming from their repeal of a local tax exemption in 2015.
On Dec. 22, the 12th Court of Appeals in Tyler rejected the district’s latest appeal, filed from Gregg County Court at Law No. 2, and refuted each of the three complaints raised by Kilgore ISD.
The case, 2016-1850-CCL2, originated in 2015 when, according to the appeals court’s opinion, “on June 15, 2015, Governor Greg Abbott signed Senate Bill No. 1 (SB-1), a bill to provide property tax relief and comprehensive school funding, which was to become effective on the later passage of an enabling constitutional amendment by the voters, increased a statewide homestead exemption, and forbade any local taxing authority with a local option homestead exemption (LOHE) in place in 2014 from repealing that LOHE before the end of calendar year 2019.”
On June 29, 14 days after Abbott signed SB1, KISD’s Board of Trustees voted to repeal KISD’s LOHE. When a Texas Senate joint resolution was later filed preventing the reduction or repeal of LOHEs, Texas Attorney General Ken Paxton, along with the Texas Education Commissioner, demanded the district reverse their repeal, which they did not do.
This led to Sheila Anderson, John Claude Axberg and Darlene Axberg filing a suit against KISD, then-superintendent Cara Cooke and 7 members of KISD’s board of trustees.
The legal battles has continued since that time, with KISD raising multiple objections to courts siding with the plaintiffs. Their latest appeal contained three points: that KISD did not “adopt” their LOHE in 2014 and therefore were allowed to repeal it, that the plaintiffs did not fully exhaust other remedies before filing suit and that the plaintiffs were not entitled to injunctive relief.
The appeals court rejected each of these claims.
Regarding the initial establishment of their LOHE, KISD asserted their exemption was created in the 1980s and this placed them outside of the bounds of the state’s LOHE ruling, which stated any LOHE adopted in 2014 could not be repealed or reduced until 2019.
The court disagreed, stating “we see no reason why the Legislature, in attempting to provide property tax relief, would prohibit a school district that voted to accept an LOHE in 2014 from repealing or reducing its LOHE, but allow a school district that voted to accept an LOHE in the 1980s and continued to adopt the LOHE through the 2014 tax year to repeal or reduce its LOHE.”
KISD filed this latest appeal after Gregg County Judge Vincent Dulweber sided with the plaintiffs in January of this year, after their original lawsuit was expanded into a class-action lawsuit to include new plaintiffs from KISD’s tax base, as well as an order for KISD to pay court costs associated with the proceedings.
The appeals court also found the plaintiffs were not at fault for failing to exhaust all possible administrative remedies before pursuing litigation. Because the issue at its heart was “purely a question of law,” the decision read, the plaintiffs were not required to exhaust all other potential non-legal remedies to the issue before filing suit.
Finally, the appeals court rejected KISD’s final claim, which declared the plaintiffs’ demands for the return of improperly collected taxes was invalid.
The district argued the plaintiffs’ request was impossible to fulfill because it would “turn back the clock” to tax collections in fiscal years which have already passed.
The court disagreed.
“The injunction sought would have a practical legal effect by requiring KISD to recalculate each taxpayer’s tax burden based on the taxpayer’s property value, excluding the percentage which would have been exempted but for KISD’s actions, and ordering KISD to stop the collection of illegally assessed taxes for the 2014-2019 tax years,” the court’s statement read.
KISD, as a cautionary measure, has been collecting all of the tax funds in question in a separate, untouched account since the beginning of the case. As of 2020, there is more than $4 million in this account, and KISD may now be finally required to return those funds to the plaintiffs.
Justice Bryan Hoyle of the Appeals Court affirmed Judge Dulweber’s original finding for the plaintiffs earlier this year.