Conroe, April 24 – The Montgomery County Commissioners Court presented some financial projections for the County government, which rat on Conroe Independent School District’s (CISD) financial projections and reveal how aggressively the school district will push for higher property tax appraisals, in the event of the passage of an $807 million bond package set for referendum on May 4, 2019 (Early Voting has begun). The County government’s financial projections surfaced during a discussion on Precinct 3 County Commissioner James Noack’s brilliant proposal to defease just under $7 million of debt.
Noack proposed $7.1 million in budget reductions through early payoff of long-term debt with funds which had accumulated in the debt service fund balance. Through discussions with Montgomery County Auditor Rakesh Pandey, Noack confirmed that there were excess funds in the debt service fund balance and proposed using that money for a significant cash defeasance.
The Commissioners Court approved Noack’s proposal on a 5 to 0 vote. Precinct 4 County Commissioner James Metts suggested that an additional approximately $2.9 million in the debt service fund balance could also go to pay off additional debt, but the Commissioners Court chose to defer Metts’ proposal until a later date in order to assess whether those funds will actually be available.
In order to present his proposal to the Commissioners Court, however, Noack enlisted the help of the County government’s financial advisor, John Roebuck of BOK Financial Securities, Inc., to present the facts and calculations. Roebuck presented a packet of financial projections to the Commissioners Court, which included a cover page, some other pages, but one page in particular, which should catch the eye of readers of The Golden Hammer, Montgomery County’s leading daily newspaper.
Roebuck’s cover page for his financial presentation to the Commissioners Court follows:
The far more interesting page, however, was the second page which contained the financial projections to justify Noack’s proposed debt defeasance. The second page follows and the interesting column is within the red circle.
What is particularly fascinating about the column entitled “Assessed Valuation Growth Rate (%)” is that the chart and the format are identical to a similar chart which Conroe Independent School District (CISD) has utilized to advocate for the $807 million bond set for a May 4 voter referendum. The CISD chart follows.
The two charts obviously follow the same format and emanate from the same computer software.
It turns out that Roebuck and BOC Financial Services, Inc., are the financial advisors to CISD as well as to Montgomery County.
The gigantic difference in the two charts, however, is that CISD’s bond projections depend upon much more aggressive property tax valuation growth than the more conservative property tax valuation growth in the County government’s property tax projections above. That the same financial advisors work for both CISD and the County government reveal that CISD’s internal policymakers have made the determination to project much higher property tax valuations than did the County government.
While the County government projects property tax valuation increases of 3.48%, 5%, and 5% for 2019, 2020, and 2021, CISD intends to push property tax valuation increases of 5.73%, 5.5%, and 5.5 for those same years in order to service its more than $2 billion of debt obligations which will arise if voters approve the $807 million bond.
CISD controls the Montgomery Central Appraisal District’s (MCAD) Board of Directors as the largest taxing entity in Montgomery County, by far, and, therefore, by having the largest voting bloc to elect the MCAD Directors. The MCAD Board sets re-appraisal policy in order to increase property taxes through property tax valuation increases.
Clearly, CISD intends to push MCAD’s Board of Directors to increase property tax appraisals.
The two charts from the same financial advisor reveal the clear fact that CISD will use its power over the MCAD Board to raise property tax valuations aggressively, if voters pass the $807 million bond and tax hike.
Bottom line: If you ever doubted that taxing entities such as CISD push appraisal districts to increase property tax valuations in order to increase tax collections, these two financial projections from the same financial advisor, same financial firm, and same time period showing different property tax valuation projections should remove all doubt!!!