The Texas attorney general has issued an opinion regarding whether school districts have authority to repeal an optional homestead tax exemption. Under this exemption, school districts have the option to deduct 20 percent of the value of a primary homestead before it is taxed. This exemption is on top of the mandatory exemption that school districts have to offer taxpayers. Districts that offer the homestead exemption to taxpayers typically do so in order to relieve the tax burden on local taxpayers.

A law passed last spring called for a referendum on whether to increase the mandatory exemption from $15,000 to $25,000. The same referendum also forbids schools from repealing the optional exemption beginning Nov. 2, 2015, through the 2019 tax year. 

After the referendum passed, but before it went into effect, several school districts realized they would lose a substantial amount of money as a result of the increase in the mandatory exemption and voted to repeal their optional homestead exemptions to offset this loss. However, the attorney general has stated that they were not allowed to do this. His opinion says that the referendum is retroactive, which means that the prohibition against repealing the exemption applied even before the referendum passed.

If this opinion stands, it will negatively impact the budgets of school districts that offer the optional homestead exemption. It is possible that one or more of the impacted districts may challenge this opinion in court, which could result in a different outcome.