How will housing market forces and added school debt of historic proportion affect your quality of life, if the bond passes?

13 September 2015
29 Elul 5775

Here in Rockwall, our RISD school board calls for a bond election in November of this year. You see those yard signs expressing love for Rockwall Schools. Indeed, we have excellent schools. How will housing market forces and added school debt of historic proportion affect your quality of life, if the bond passes?

Herein are facts you should consider to be an educated, informed voter and taxpayer. I invite RISD school board members and Rockwall CAD officials to correct any statement of fact in this posting.

US Home Price Overvaluations

School property taxes are a function of the effective tax rate. What is an “Effective Tax Rate”? Texas State Comptroller Glen Hegar provides the following information:

Effective Tax Rate

The effective tax rate enables the public to evaluate the relationship between taxes for the prior year and for the current year, based on a tax rate that would produce the same amount of taxes if applied to the same properties taxed in both years. [Texas Tax Code § 26.05(a)(2)]


To do this, several adjustments must be made. Those adjustments are found in the Effective Tax Rate Worksheet. The formula assumes that if values increase, the tax rate should decrease to create the same amount of revenue as it did the year before or if values decrease, the tax rate must increase to produce the same amount of revenue. [Texas Tax Code § 26.05(c)(1)]

Effective for the 2015 Tax Year

School district 2015 effective Maintenance and Operations and rollback tax rates are calculated based on a $25,000 residence homestead exemption under Tax Code Section 11.13(b). [Texas Tax Code § 26.08(q)]

Tax officials are required to adjust school district tax ceilings of persons age 65 or older or disabled to reflect an additional $10,000 residence homestead exemption. [Texas Tax Code § 11.26]


A Word To Seniors 65 and Older

The difference between your property taxes and those of your young neighbors is you enjoy $35,000 exemption while they have a $25,000 exemption. And if you qualify for the age 65 or older or disabled exemption, you’re also entitled to a permanent, locked-in “ceiling” on the school property taxes on your home.

A Word To All You Young Property Owners (Under 65 Years of Age)

There is no ceiling to school property taxes on your home.

If I have your attention,

You should understand from the above information how a housing market crash will affect your taxes. As property values decrease, effective tax rate increases.

Learn more about our Texas Property Tax System from Texas A& M University via this link.

Property Value Outlook

Present 2015 housing market is in a boom stage with homebuyers paying “highest and best” for existing homes. In particular, our North Texas housing market is in a “price bubble”. What eventually happens to all bubbles, whether soap or housing? The burst (or bust). Is this solely my opinion? Consider the following economic news articles.

Dallas Morning News: Runaway North Texas home prices spark fears of another price bubble – June 2015

Forbes: America’s Most Overvalued And Undervalued Housing Markets – June 2015 Erin Carlyle doesn’t predict the housing bubble will burst. Instead, she says, “The issue isn’t that their prices are in a bubble, it’s just that prices grew faster than fundamentals. That’s why we’re worried about these markets.

Biz beat Blog of the Dallas Morning News: Texas, Dallas-Fort Worth home prices are significantly overvalued, analyst warns

CNN Money: Warning signs in the housing market –  March 2015

The Motley Fool: Are We Entering Housing Market Bubble 2.0? – July 2015

The Fiscal Times: Get Ready for Another Real Estate Bubble – March 2015

Excerpts from Fiscal Times

  • CoreLogic also cited four states (Colorado, Texas, Wyoming and New York) where home prices have reached new historical record highs.
  • Some of the largest price increases, including distressed sales, occurred in the… Dallas/Plano/Irving market (9.1 percent), according to CoreLogic.

Over half of all property taxes assessed on City of Rockwall property owners is School Taxes, approximately 65%.

Question of the Hour

With the above outlook on property taxes, ask yourself: Is this a good time for a $267,000,000 (this is over one-quarter billion dollars) school bond?

Keep in mind this simple fact. Regardless the employment situation. Regardless the number of inevitable bankruptcies and home mortgage foreclosures in our city, it is the EFFECTIVE TAX RATE that will pull in the money from your pockets, young people, to pay those bonds.

Because I am a senior citizen, my taxes are “frozen”. My concern isn’t for me and my fellow grandparents. My concern is for my children, grandchildren and younger fellow citizens who will bear the brunt of tax increases to pay school district debt. Generations yet unborn will be paying this debt.

John White
Rockwall, Texas

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