There is a problem with the “penny swap” that the voters approved for EPISD.
Quite simply there is not enough money now being generated by the interest and sinking fund (I&S) rate to pay EPISD’s debts.
Last year the voters approved reducing the I&S rate by 10 cents per hundred dollars of property valuation and increasing the maintenance and operations rate the same amount (M&O) thus leaving the combined rate the same as the previous year.
Then since the district did not have enough money to make their bond payments (I&S) they took money out of an existing fund balance. In short they took our I&S money over a period of years and did not pay down all of the debt they could, thus creating a fund and increasing our borrowing costs.
You can see that the new I&S tax rate only generated $29 million. They needed $40.1 million to pay their debt payments.
What they did was reduce their fund balance from $30 million to $18.9 million. They can probably do this again next year but then they will run out of money.
They cannot take the money from their maintenance and operations fund.
The Texas attorney general ruled last year that:
“Districts do not have authority to increase the maintenance and operations tax rate to create a surplus to pay debt service
with maintenance and operations tax revenue. See TEX. TAX CODE § 26.012(16) (defining “maintenance and operations” as “any lawful purpose other than debt service for which a taxing unit may spend property tax revenues” (emphasis added)).”
The net result is that the district will have to raise the I&S rate either this year or next.
The voters got hoodwinked.
We deserve better