After a public hearing Monday, June 20, to discuss the Local Optional Homestead Exemption (LOHE) offered to taxpayers in the district, Navasota Independent School District Board of Trustees voted unanimously to repeal the 20% exemption that has been offered for 30 years.
Prior to the meeting, the district released an informational video with NISD Superintendent Dr. Stu Musick discussing LOHE facts and how it impacts the district.
Musick stated in the hearing that LOHE discussions between the district and the district’s financial advisors began in November and December 2021, and discussions with the board began in January or February this year.
Since implementing the LOHE in 1992, a lot has changed for the economy and school district. The state mandated homestead exemption has seen an increase throughout the years. In 1992 the state exemption was $5,000. It then increased to $15,000 to $25,000 and most recently to $40,000.
Voters approved the final state homestead exemption increase, Proposition 2, by approximately 86% in the May 2022 election. With the state homestead exemption of $40,000 combined with the 20% LOHE offered by NISD, a home valued at $100,000 would have a $60,000 exemption and only $40,000 taxable value.
Steve Pierce, Strategic Solutions Specialist with Region 6 Education Service Center, said in total, between M&O and I&S tax rates approximately $2.1 million was not collected for NISD in 2021-2022 because of the LOHE being in place.
Max Brand, a real estate agent and local pastor of 16 years, said with the current inflation, this may not be the best time to remove the 20% LOHE. “I would think you would do well to, at the very least, table this for a year and consider how the economy is going after we see how things are,” said Brand. “It may be more appropriate then. I ask you to seriously consider not removing the LOHE.”
Brittney Taylor, who works for the district, questioned if the repeal of the exemption would be done at the full 20% or gradually. “I know we have to do something,” she said. “That is apparent. We are in a hole and have to do something.”
Musick said the board discussed whether to decrease in phases or to “rip the band-aid off” and repeal the 20% exemption as a whole. He stated with Proposition 2 passing which increased the state homestead exemption by $15,000 from $25,000 to $40,000 the board believes the time to repeal the exemption is now, so it somewhat eases the impact.
Taylor asked if repealing the LOHE would just help offset debt or if it would go toward salary increases. “In essence we are really just working to pay off a debt? There won’t be any salary increases from this?”
Musick replied, “We’re working on this. We know what we have to work with. I can’t tell you the answer to that. It is ultimately my goal and the goal of these seven people’s goal up here – to work toward that.”
NISD Board member Jennifer Ramirez interjected, “and not just a goal, a priority.” Musick said, “But we have to know what our budget is to work with before we can answer that question better.”
Paul Stankowitz questioned why every other district within the county has a “flat neutral or positive budget,” while NISD’s budget has been negative for years.
NISD Board member, Paul Malek replied, “It is by design. I have been on the board for 6 years. Prior to me being on the board, our fund balance, which is the monies that are left over positively from the difference between the income and expense budget, goes into a fund balance.”
Malek continued, “The state mandates the fund balance needs to be between 2-3 months of operating revenue. We were up to almost 7 months. The only way to get that money back into the system is to run a negative budget or a deficit budget. There is no other way. And I have asked the auditors and everybody if there is a way to get that money back into the system. So, what we chose to do was run a deficit budget for 4 years. And that took what I considered hoarding the taxpayer’s money and put it back into the system, so we would not have to raise any of the rates.”
Musick stated a portion of the funding a district receives is from student enrollment and attendance. He said due to COVID, which no one could predict, accounted for the loss of 160 students. He is hopeful with the growth of the economy that enrollment will also increase.
June 20 recap
A full recap of the June 20 meeting of the NISD Board of Trustees will publish in the June 29, edition of The Examiner.