Special Districts in Texas
Overview
Special Districts in Texas
Learning Objectives
By the end of this section, you will be able to:
- Explain the structure and function of special districts in Texas
Introduction
“In general, most citizens know comparatively little about the jurisdiction, structure, functions, and governance of special purpose districts, thus making them the invisible government of Texas.”
Texans seem to love special purpose districts. As of 2014, Texas has approximately 3,350 of them, and the number increases every year. There are far more special purpose districts in Texas than cities and counties combined, yet most Texans know almost nothing about their function, structure, or governance.
Special Districts in Texas
Special purpose districts are governmental entities with specific geographic boundaries that are created to provide specific services such as drainage, water and sewer service, or firefighting. Districts can be created by the Texas Legislature, by local governmental bodies, or sometimes by a state agency.
Districts are controlled by a board of directors, sometimes elected by voters but sometimes appointed by the legislature or the governing body of a local city or county. If you are taking this class from a community college, your college is a special- purpose district – a community college district created by the state legislature and funded mostly by an ad valorem tax levied on property within the district boundaries.
Let’s look at some of the different types of special districts in Texas.
School Districts
The most common district in Texas is an independent school district. Texas has 1,031 school districts, which manage 9,317 public schools serving over five million kindergarten through 12th-grade students. The number of school districts has declined in recent years as some rural districts have consolidated as student populations dwindle.
School districts generally levy a higher property tax rate than any other jurisdiction. The Katy Independent School District has a property tax rate of $1.52 per $100 of property value, more than three times the $0.49 rate of the City of Katy. Despite the cost to taxpayers and overall importance of their mission, school district trustees often receive less attention from voters and the press than city council members.
A school district is governed by a board of trustees, elected in a non-partisan election – generally in May of odd-numbered years. Elected school trustees are volunteers, receiving no salary for their services. They hire a superintendent to run the day-to-day operations of the school district. The board of trustees sets the district property tax rate, approves the salary schedule for teachers and staff, and approve contracts for the construction and maintenance of school facilities and equipment. School districts are also transportation and food-service providers – often massive ones. The Houston Independent School District serves more than 269,000 meals and transports approximately 36,000 students to and from school on a fleet of nearly 1000 buses every school day.
Community College Districts
Texas has 50 community college districts, serving more than 700,000 students. Chosen by voters in non-partisan elections, community college district boards of trustees serve the same role as school district trustees for their colleges, setting the tax rate, salary schedules, and approving contracts for facilities, equipment and other needs. Community college boards hire a chancellor to run the district’s day-to-day operations.
Municipal Utility Districts
When developers create a new residential subdivision, generally outside the city limits of a nearby municipality, on previously rural land, how do those new homes get water and sewer service? Texas has long utilized the municipal utility district (MUD) to create that critical infrastructure. A MUD can be created by the legislature or by the Texas Commission on Environmental Quality with specific geographic boundaries.
Once established, the residents of the district (sometimes a few development company employees moved into trailers specifically to be voters) vote to authorize the district to sell bonds – borrowing money from bondholders, who are paid back later with interest. The district uses the money raised from selling bonds to build a water and sewer system for the new subdivision. Homeowners then pay a property tax, as well as water and sewer rates for the water they use, to the district, which used that money to repay the bonds.
Hospital Districts
Indigent health care in Texas is left largely to county governments, which are often ill-equipped to deal with this complex task. Some counties have formed hospital districts to collect a property tax and provide health services. The Harris County Hospital District (now called simply Harris Health) collects a property tax of $0.17 per $100 of property valuation. With the $717 million that tax raised in 2018, Harris Health handled more than 161,000 emergency room visits and more than 1.7 million outpatient clinic visits. Hospital districts are run by boards of trustees, with members appointed by county commissioners’ courts.
Other Districts
In addition to the four categories of districts discussed above, Texas has dozens of other types of special-purpose districts from rural fire prevention districts, which provide fire protection services, to mosquito control districts that test for evidence of mosquito-borne diseases and spray insecticide.
One interesting type of district is the Tax Increment Reinvestment Zone (TIRZ). A TIRZ can be created by the legislature or by a local jurisdiction and is a tool to jumpstart the improvement and redevelopment of a troubled area.
The taxable value of commercial property in a TIRZ is “frozen” at a certain point in time, with the city – sometimes in partnership with other taxing jurisdictions – continues to collect taxes as if the value of property within the zone doesn’t change. If redevelopment efforts are successful in improving the area and raising property values, the TIRZ keeps the increment between what the city collects and what the city would have collected had the property value increase been applied, with that money being used to finance further improvements in the area – new and improved streets, parks, better drainage, even additional police patrols.
To a city, in theory at least, they would likely have never collected that increment anyway, since property values in blighted areas tend to be stagnant. When the TIRZ expires, however, the city realizes a windfall of additional tax revenue, as well as an area with better infrastructure and a healthier business and residential climate. TIRZ board members are appointed by the governing body of the city that includes the TIRZ.
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Special Districts in Texas. Authored by: Andrew Teas. License: CC BY: Attribution