Where the Money Comes From

Special purpose districts include community colleges, emergency services, health services, libraries, crime control, development, flood control, water and sewage services, transit authorities, and hospital districts. The main revenue sources for special purpose districts are property taxes and sales taxes.

Property Tax

There are more than 1,600 special purpose districts that are authorized to levy residential and commercial property taxes in Texas.

According to the Texas Comptroller of Public Accounts’ Annual Property Tax Report, in 2008, special district property tax levies amounted to $4.95 billion. Though property taxes make up a significant source of revenue for special districts, they collected the smallest share of property taxes than other local government entities at 12.7 percent. Special district property taxes experienced an average annual increase of 7 percent since 1989.

The largest special districts in Texas are community colleges, and hospital or health service districts. The highest property tax levy was by the Harris County Hospital District, collecting $533 million in 2008.

Sales Tax

In 2009, total special district sales and use tax remittances amounted to $230.2 million, a 3.9 percent share of all local governments authorized to collect sales taxes in Texas. Though special districts receive the smallest proportion of sales tax revenue, they had the most significant increase in sales tax remittances between 2007 and 2009, increasing more than 10 percentage points higher than other local governments authorized to levy sales taxes. Special district sales tax rates range from 0.125 percent to 2 percent, depending on the priorities of local communities.

Other

Since special districts serve a variety of different functions, other revenue sources depend on the type of government service the special district provides. A community college receives other revenue from tuition, while hospital or health-service-centered districts collect revenue from fees for services or premium payments.