One-Tenth of a Penny Change to the Tax Rate
If approved by voters, the bond referendum is estimated to increase the Interest & Sinking tax rate by one-tenth of a penny. For a home valued at $450,000, which is the average property value in Northwest ISD, this rate change would result in an increase of $4.10 per year to the homeowner’s tax bill. (This example includes the $40,000 homestead exemption.)
Northwest ISD’s current total tax rate of $1.2746 is the district’s lowest total tax rate since 1993. (Read news story.) The current tax rate includes a maintenance and operations rate of $0.8546 (used to fund salaries, utilities and other day-to-day expenses) and an interest and sinking rate of $0.420 (used to pay down debt incurred from issuing bonds as approved by voters). If approved, the I&S rate would increase from $0.420 to $0.421, meaning the I&S tax rate is projected to increase $0.001, or one-tenth of one cent.
HOW IS THE DISTRICT ABLE TO ISSUE NEW BONDS WITH a minimal tax rate increase?
Because of additional residential, commercial and retail development within Northwest ISD’s boundaries, the district can issue more bonds with minimal change to the tax rate.
The amount of taxes levied by NISD are calculated by multiplying the total tax rate by the Taxable Assessed Value (TAV) of the property within the district. The taxable values are set by the county appraisal offices. The district’s TAV increases each year as new commercial and residential development takes place. This additional tax base will generate more tax revenue, even if the tax rate is increased by a small amount.
Calculate the Tax Impact of 1/10th Penny Increase
Adjust the slider below to calculate the tax impact for your home.
Fiscal Management Highlights
NISD has historically taken advantage of bond refinancing opportunities and has completed four refundings since Nov. 2019 resulting in over $75 million in savings.
The $1.9 billion won’t be sold all at once and would not be spent until necessary growth occurs. Once bonds are authorized by voters they are sold in increments over time as needed to fund the projects.
State law allows for bonds to be financed up to 40 years. NISD finances bonds for 25 years, and with refunding opportunities and tax base growth has paid off past bonds in 15-20 years.
NISD maintains its high credit ratings from two national statistical rating agencies, AA from Fitch and Aa2 from Moody’s.
Understanding the Tax Rate
Public school taxes involve two figures, which divide the school district budget into two “buckets.” The first bucket is the Maintenance and Operations budget (M&O), which funds daily costs and recurring or consumable expenditures such as teacher and staff salaries, supplies, food, gas and utilities. Approximately 84 percent of the district’s M&O revenue goes to teacher and staff salaries. The second bucket is the Interest and Sinking budget (I&S), also known as Debt Service, and that is used to repay debt for longer-term capital improvements approved by voters through bond elections.
Proceeds from a bond issue can be used for the construction and renovation of facilities, the acquisition of land and the purchase of capital items such as equipment, technology and transportation. I&S funds cannot by law be used to pay M&O expenses, which means that voter-approved bonds cannot be used to increase teacher salaries or pay rising costs for utilities and services.
General Operating Fund
(Maintenance & Operations)
Day-to-day operations and expenses
FOR SCHOOL DISTRICTS, THIS INCLUDES:
Staff Salaries
Utilities
Supplies
Repairs
Fuel
FOR THE AVERAGE CITIZEN, THIS IS SIMILAR TO:
Groceries
Utilities
Minor Home Repairs
Routine Services
Car Fuel
Debt Services Fund
(Interest & Sinking)
Principal and interest payments on debt issued
FOR SCHOOL DISTRICTS, THIS INCLUDES:
New Construction
Renovations
HVAC Systems
Roofing
Technology
FOR THE AVERAGE CITIZEN, THIS IS SIMILAR TO:
Mortgage
Home Renovation
Major Appliances
Land
Car
This bond election will increase the I&S Tax Rate one-tenth of a penny
Tax Rate History
The current total tax rate in NISD is the lowest it has been since 1993. The decrease shown in the M&O rate since 2019 is a result of the compression from House Bill 3, the state's property tax relief bill. In 2020, the NISD Board of Trustees also voted to lower the I&S rate by $0.03. With voter approval of the May 6 bond election, the I&S rate could change from $0.420 to $0.421, which is one tenth of a penny.
Understanding Your Tax Payment vs. Tax Rate
Even though the NISD total tax rate is the lowest it has been since 1993, your taxes are higher due to the overall property value growth, not the tax rate.
Example Tax Payment Over 7 Years
Scenario assumes 5% property value growth each year.
The NISD Tax Rate has decreased since 2018 as a result of statewide property tax relief and compression of the M&O tax rate.
The assessed value is set by your county appraisal district.
The M&O portion of your tax rate is set by the Texas Education Agency
The amount of taxes paid by each taxpayer is calculated by multiplying the district tax rate by each $100 of taxable value of the property.
Voters Over 65
Citizens 65 & over are eligible for an “over 65” homestead exemption.
Northwest ISD property taxes for citizens age 65 or older would not be affected by the bond election. According to state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older cannot be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value unless significant improvements are made to the home. If you are 65 or older, you may file a homestead application at any time, or contact your local appraisal district to see if you already have the appropriate exemption on file.