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July 12, 2014

Commerce ISD to raise taxes

COMMERCE — Low property values and a decrease in enrollment caused a slight tax increase for Commerce Independent School District, according to Finance Director John Walker.

Walker said the property values and student enrollment have been in decline over the past five years, which led to the school needing to raise taxes to increase revenue in order to pay off its debt.

“Those factors influence the revenue the most,” he said.

In order to keep the statutory requirement of paying off its debt through the tax rate, the Interest and Sinking (I&S) tax was increased by $0.03, from $0.4214 to $0.4535. Combined with the Maintenance and Operation tax of $1.17, and the district currently has a tax rate of $1.59.

Over the past five years, Commerce property values went from approximately $405 million down to $388 million.

Walker said a large portion of the drop is due to the loss of Covidien, which still had taxable inventory last year, but is almost completely gone now.

“It was the last little bit of Covidien,” he said. “They still had equipment and inventory last year. All those things went away.”

The departure of Covidien not only had a large impact on the total value, but it also had an impact on the city, and Hunt County as a whole.

Since many of the workers had children enrolled in Commerce ISD, Covidien’s departure affected the enrollment, which has dipped in consecutive years.

“They had an impact on all of us,” he said.

Commerce ISD receives approximately $5,000 in funds for each student enrolled and attending school.

Much of it is based on the average daily attendance (ADA) of the students enrolled.

During the 2011-12 school year, the district had an ADA of 1,504 students. Enrollment dropped to 1,462 ADA the following year. And this past year, a decrease of 45 students led to a total of 1,417 ADA.

When tallied, the loss of 87 students over the past three years has cost the district roughly $435,000.

Much of the state revenue comes from daily attendance, which Walker said could be reduced.

“Chances are our state revenue is going to go down because of it,” he said. “It makes it real interesting.”

To operate the school year, the district has a current budget set of $12.4 million. Payroll makes up the largest portion at 74 percent. Contract service is at $1.9 million, comprising 16 percent of the budget, with supplies taking up five percent, other operating expenses at four percent, and the debt service taking up the remaining one percent of the budget.

Walker said there is only so much the district can do to cut costs, without letting people go.

“We can take away all the pencils and papers in the district, but it can only do so much,” he said.

In order to not let faculty and staff go, Walker said they are compensating through attrition.

Even with all the negative factors affecting the budget, Walker said the district still should make the budget this year.

“Our goal is to come in under budget,” he said.

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