LHISD buoyed by higher tax valuations



With intense enrollment growth, Liberty Hill ISD faces steep cost increases from new facilities to equipment and staffing needs.

Sharply increasing property valuations are expected to provide the increased revenue to accommodate the additional financial needs as the district begins formulating its next budget.

The district received the news in April that valuations continued to climb, when the Williamson County Appraisal District estimated 27 percent growth in property values across the district.

“It was shocking to say the least,” said LHISD Chief Financial Officer Rosanna R. Guerrero. “Alvin Lankford, who is the chief appraiser with the Williamson Central Appraisal District, said in his entire history he has never seen that value growth from year to year.”

The growth for the current year was at 19 percent.

“Double-digit growth is pretty massive, but to look at over 20 percent growth is definitely more than what we ever anticipated,” Guerrero said.

The final certified appraisals will be announced July 25.

The total market value for all properties within LHISD has tripled since 2016, from $2.6 billion that year to $6.18 billion in 2021. Single family residential property makes up the bulk of local property values at 78 percent, while commercial makes up only 4.74 percent.

“One of the things we’ve been talking about, not only with our Long Range Planning Committee, but also with our Board and as a community is how we can attract more businesses and build on that commercial base in terms of property values,” Guerrero said. “That’s an important piece because you want to talk about sharing that tax burden with commercial properties as well.”

In terms of median home values, Liberty Hill is outpacing Williamson County as a whole at $347,853 compared to $323,450 countywide.

A majority of the revenues for the district come from local property taxes, which comprises 65 percent. State funding makes up 33 percent, with local revenue and federal funding each totaling one percent.

The property tax rate for school districts consists of a Maintenance and Operations (M&O) rate and an Interest and Sinking (I&S) – or debt service – rate.

The M&O rate is $0.86 per $100 valuation, while the I&S is $0.50 per $100 valuation for a combined LHISD rate of $1.36 per $100 valuation. That rate is not expected to change going into the new budget year.

The M&O rate – which had for a long time been maxed out at $1.04 – dropped seven cents in the 2019-2020 budget year in accordance with Texas legislative changes, and then was reduced again to $0.86 under House Bill 3 during the 2019 legislative session.

“Part of that bill required a compression of the maintenance and operations tax rate based on property value growth,” Guerrero said. “Liberty Hill ISD, being a very fast growing district as we just discussed, had to compress the tax rate.”

A further compression is not anticipated going into the new fiscal year.

“Based on our projections and what we’re seeing from the state they will not be lowering the floor as of what we know right now, so we’re looking at setting the tax rate at the same level for next year. That might change, the legislative session isn’t over and they could come back and give us some updates. All indications are that we will not have to compress that M&O tax rate.”

Because LHISD is considered a high wealth per student district according to state funding formulas, it receives less per student from the state.

“It’s really based on what the state defines as a wealth per student,” Guerrero said. “They look at the overall tax base for the district and then they divide that by our overall number of students. Then they come up with this number that is defined as wealth per student.

“In general, districts that have a lower wealth per student means higher state funding, and districts with higher wealth per student receive lower state funding. As property values increase, the district receives less state funding.”

Liberty Hill ISD is a recapture district, meaning it could be subject to sending funds to the state, but again the district’s growth keeps it in the “gap” category where it will avoid paying recapture funds.

“In 2021-2022, we will still be in the gap and we will remain a non-paying recapture district,” Guerrero said. “That was exciting news. When it comes to the gap, where does that put us? It probably puts us closer to becoming a paying district. What is going to keep us in the gap is our enrollment growth. That is paramount that we keep the students coming and maintain that ratio.”

The enrollment growth for the current school year was 497 students, and that number is projected to nearly double to an estimated 890 new students for the 2021-2022 budget.

Editor’s Note: Look for more information on LHISD’s first look at the expense side of the 2021-2022 budget process in the May 20 edition of The Independent.