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Interview with David Thompson

You’re probably aware of the HISD referendum on the ballot this fall, which authorizes the Board of Trustees to pay $162 million to the state of Texas to comply with recapture, a/k/a Robin Hood laws. There’s a lot of opposition to this referendum, from several HISD Board members, the Chron editorial board, the Houston Federation of Teachers, and more. You’re also probably aware that voting the referendum down does not get HISD off the hook for recapture, it just means that instead of sending the Texas Education Agency a check, they will “detach” properties from HISD to fulfill the amount. Those who oppose the referendum hope to force the Legislature to take action to address recapture, while others say this is too big a risk to take? If you’re like me, you’re probably a little confused by all of this. With all that in mind, I reached out to David Thompson, who serves as general counsel for the HISD Board and who has represented HISD in multiple school finance lawsuits, to ask him all of my questions about recapture and the referendum. He helped me to understand it a lot better, and I hope the same will be true for you:

Interviews and Q&As from the primaries are on my 2016 Election page. I will eventually get around to updating it to include links to fall interviews.

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3 Comments

  1. Sarah Becker says:

    I hope your readers know that not only is David Thompson the HISD Board General Counsel, but his firm also has a lobbying contract for the legislature while they are in session in the spring. So while he is an “expert” in school finance, he has a personal financial interest in this ballot measure and when he tells people how to vote no, I think people should know that. He is not a neutral party.

  2. Bill Blackwell says:

    Chuck – Good interview, thanks! It basically echoes what was reported in the Chronicle, though a few points stuck out to me. I’ve communicated them via social media, but I’ll also post them here (in a slightly different form) for broader discussion purposes.

    1) For background, the State of Texas (i.e., The Lege) has capped school property tax rates, and the cap is both for debt service (i.e., bonds) and maintenance and operations (aka running the schools). I believe the caps are at $0.50/$100 for debt and $1.17 for M&O, but I could be off.

    Many districts are operating at one or both of those caps. HISD is not (yet) among them.

    In the name of ‘property tax relief’, the state mandated an increase in the homestead exemption from $15,000 to $25,000. The obvious effect of this will be to shift more of the local school tax burden onto commercial property and to create an upward push for rates towards the caps.

    2) As mentioned in the interview, there is not a balancing part to “Robin Hood”, so it’s past time to retire that moniker from the 1980s. The state is skimming tax dollars from schools, all while reducing the share of state tax collections that it more traditionally would have spent on education. Ending the euphemisms might help elevate the discussion among ordinary Texans.

    3) In my experience of the issue (going back to when I was a schoolkid), the only times the legislature has seemed to act has been when there is a judicial mandate (either directly or with the threat of a judicially-imposed solution). Given the noise about more property tax relief, I don’t see more money coming to schools in the upcoming session.

    4) You said it was coming, but some clarity around the issues of property wealth vs. tax collections would be beneficial. I’m sure that HISD has looked into reducing tax rates to avoid the payments, so it would be good to understand what nominal tax rate and/or wealth level per pupil is being used to evaluate districts’ tax bases.

    5) The focus in the interview on “tax uncertainty” as a hindrance to economic development is misplaced. Given the caps, above, there is potential for a taxpayer to see a large percentage increase in their school tax component, but this would amount to a maximum of about a 20% increase in the overall property tax burden for a given property (taking the rate to a maximum of 1.67%), which is, itself, then a portion of the lease and/or operating costs of a large office tower. This isn’t insubstantial, but the broader economic climate (e.g., the price of oil) is going to dwarf this issue.

    6) Likewise, the focus on bonds is unbalanced in its representation. HISD’s ability to raise and service debt is going to be impaired under either scenario. The only case where it isn’t impaired is if this issue goes away entirely, which it won’t without a lot of help.

    7) The current “attendance credits” solution was deemed constitutional, but with a lot of commentary about the quality of the solution from the issuing judge. Since no district has yet to vote against attendance credits, I do not think that one can assume that a narrowly-ruling judge has ruled the alternative as being constitutional. In other words, just because the one IS constitutional, doesn’t mean that it’s corollary is. All of the individual pieces of uncertainty in the process that Mr. Thompson brings up ought to be sources of litigation for years to come. THAT seems to be the only path to getting the lege to act responsibly, low probability that it is. It would be a bonus if HISD got to keep its funds or put them in escrow (not with the state) for the duration of the outstanding litigation. That would be a nice outcome to a deplorable circumstance.

    In other words, vote “no”. I’d rather go down fighting to change this silliness rather than continue to enable it.

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