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HB3 and the Tax Rate

Posted Date: 05/25/2021

HB3 and the Tax Rate

Before I get into the implications and impact of HB3 on the local tax rate, I want to thank our community for partnering with us as we began another school year.  The 2019-2020 year is off to a great start and we have so many people to thank for that.  Our staff, families, churches, businesses, students, and community members truly worked as a team this year as we held our first ever community outreach day, hosted hundreds of families at the Back to School Bash, and engaged record numbers of stakeholders in inspiring and empowering everyone to cherish the #moments that matter.  THANK YOU, Pampa!


Now….back to the ongoing impact of the legislative session.  As I have noted in previous articles, HB3 was a historical bill for education and one that will be leaving a legacy of change that has not been felt or seen in public schools in more than 30 years.  One of the biggest changes from HB3 was how we fund public schools in Texas.  This bill is very complex and cumbersome; however, I will make an effort to explain the basic tenets and share what this will mean to you, the average taxpayer in Pampa, Texas. 


If you recall, the M&O tax rate prior to HB3 for Pampa ISD taxpayers was $1.06 on $100 value.  In an effort to reduce property taxes across the state, HB3 compressed the capped rate of $1.17 to $1.055.  As you can see, Pampa ISD had a low rate compared to the state cap rate of $1.17.  As a result of HB3, the M&O rate for Pampa ISD was compressed to .99 cents ( a decrease of 7 cents).  This is great news for Pampa ISD taxpayers.  This; however, means less local dollars going to the school.  To compensate for this loss of revenue, the state raised its contribution to public schools and is now at around 40%.  This is an increase from 32%.  This is also good news.  Now, with any change of this magnitude, there are growing pains, systemic shifts that inevitably result in errors, and a climate of uncertainty.  Quite frankly, the legislators knew that this bill was going to create an enormous amount of excitement but also recognized that along with this enthusiasm, would also come confusion and frustration for those of us in the districts trying to develop budgets with “hypothetical planning amounts” and a long waiting list for when we would receive guidance from the Texas Education Agency. 


So, what does this mean to you?  Basically, on your next tax statement, you will notice a 7 cent decline on your M&O tax RATE from the Pampa ISD.  Remember, the rate is separate from the property values and the Pampa ISD has no control or influence over that realm.  However, on average, most people will pay less in property taxes this year.  It is important that you know; however, that the tax rate is likely to fluctuate in the coming years.  But why?  Well, in theory, the tax rate should go down another penny next year (.98).  However, the legislators openly admitted that they really don’t know for sure how all of these massive changes in the funding formula and tax rates were going to really pan out in the end.  So, they left a safety net for districts.  This was both a political move, but also a smart move.  Basically, the local school boards can and may find that they need to raise the local M&O rate after this first year.  This will happen if the shift in formulas and state share and local share is insufficient to maintain at least the status quo.  Remember, HB3 also mandated significant staff compensation raises.  Honestly, the legislators needed to make sure local boards had a mechanism to sustain that mandate.  The good news is that the rates are down for now and that provides some relief to the local taxpayer.  The bad news is, with all of the unknowns, it is difficult to predict what the tax rate changes will be next year.  We will just have to wait and see.


This was an attempt to simplify just a portion of a very complex bill.  I would be glad to answer any further questions you may have.  I also urge you to learn more about HB3 and the many other education bills that passed in the 86th Legislative Session.  To learn more, you can go to  This is a final bill report from the Texas Association of School Administrators (TASA).  It is very comprehensive and easy to understand.  Again, thank you Pampa for your continued support!  Let us know if you have questions, ideas, or suggestions.  We welcome your feedback and value the relationship we have with our Pampa community and stakeholders. 


Tanya Larkin


Pampa Independent School District


Published on 09/30/2019

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