DALLAS — The Austin Independent School District can go ahead with its multi-year capital program after a state district court judge approved the May election that authorized $489.7 million of general obligation bonds.
Information given to voters on the higher property-tax rate needed if the debt was approved was an estimate, Judge Tim Sulak said after Monday’s hearing in 353rd Civil District Court in Austin. Andrews Kurth LLP, the district’s bond counsel, filed the bond validation request May 29.
The expedited declaratory judgment removed a cloud of legal doubt hanging over the bond election, the district said.
“Today’s court ruling paves the way to proceed with the issuance of the public securities approved in that election,” the statement said. “The ruling will permit [the district] to carry out the will of Austin voters, and to begin moving forward with plans for funding the school improvements voters deemed are necessary.”
Attorneys for the Travis County Taxpayers Union unsuccessfully contended at the hearing that the district misled voters and violated Texas election laws by failing to set a firm top tax rate. Otherwise, the group said, the ballot should have noted that the tax increase would be unlimited. By not including a maximum rate on the ballot, Sulak ruled, the district did inform voters of an unlimited increase.
Stephen Casey, an attorney for the taxpayers group, said Sulak’s ruling means voters can no longer be sure that property taxes won’t go up more than promised before an election.
“Now they are willing to tell you with how many things they want to do with the bond, but when they go to tell you about how much it costs, they don’t put that one there,” Casey said. “I think the taxpayers really need to hold this school board in check in how much they’re spending.”
Voters were told that passage of all four propositions of the proposed $892 million bond package on the May ballot would result in a maximum increase of 3.5 cents per $100 of assessed valuation over the duration of the bond program. The tax bill on $200,000 home would be $70 a year higher if all four bond propositions were adopted, the district said.
Voters on May 11 approved two of the four propositions on the ballot. The lower debt authorization reduced the tax increase to $39 a year. The defeated proposals would have devoted $234 million to new schools and expansions at existing facilities to curb overcrowding, and $168 million for academic initiatives. The district’s current tax rate totals $1.242 per $100, including $0.163 for debt service. The taxpayers group can appeal the ruling, but must post a $15 million security note. q
The district told the judge that a one-year delay could cost it more than $33 million in higher construction costs and other losses.
Don Zimmerman, founder of the Travis County Taxpayers Union, said the group will consider its options before deciding how to proceed.
“We’re pretty upset about this,” he said. “This is kind of unprecedented.”
The ballot language was too vague, Zimmerman said.
“It says 'we’re going to levy a tax,’ ” he said. “It’s an optimistic estimate and it has absolutely zero legal binding.”
Austin Independent School District’s $757 million of outstanding GO debt is rated triple-A by Moody’s Investors Service and AA-plus by Fitch and Standard & Poor’s. The debt is enhanced to triple-A across the board with coverage from the Texas Permanent School Fund.
