Page 14 - ABHR MUD BOOK 2022

• The weighted average MUD tax rate has declined from a high of $0.9608 in 1988
to $0.6111 in 2015.
• The 2015 MUD tax rate of $0.6111 is a near historic low, even after the region
weathered the recent recession and slow recovery.
• A MUD tax rate of $0.6111 compares favorably with many of the cities in the
Greater Houston Area.

MUDs in Houston’s Extraterritorial Jurisdiction:

• The City of Houston’s 2015 tax rate was $0.60112. The 2015 weighted average
MUD tax of $0.6111 compares favorably.
• There are approximately 422 MUDs in Houston’s ETJ.
• Of those MUDs, approximately 233 MUDs are active and have 2015 tax rates less
than Houston’s 2015 tax rate.
• As of 2015, 55% of the MUDs in Houston’s ETJ have a lower tax rate than
Houston.
• The estimated population in the 422 MUDs in Houston’s ETJ is 1,909,468 people.
• The estimated population in the 233 MUDs with lower tax rates is 982,947
people.
• Almost one million people pay lower property taxes by living in a MUD rather
than living in Houston.
• If Houston annexed all the MUDs, almost one million people would immediately
pay higher property taxes.

A MUD is a low tax alternative to other forms of local government:

• MUD tax rates and tax bills decline over time. This is not true of most other
forms of government.
• The majority of MUD taxes are used to pay debt; only a small amount of MUD
taxes are used to pay for operation and maintenance. This is not true of most
other forms of government.
• As MUD debt is retired, tax rates go down. This is not true of governments that
spend more of their taxes on services and operation and maintenance. Taxes for
services and operation and maintenance generally increase – at least enough to
keep pace with inflation and growth, but oftentimes more.
• One important reason for the low operation and administration costs of MUDs is
the typical MUD has no, or very few, employees. All services are provided by
professional consultants working under contract with the MUD.
• As a result, MUDs do not incur the costs associated with employees:
compensation, benefits, office space and overhead, rising costs of health care, and
demands of pensions and retirement benefits.
• Some other forms of government leave behind “Legacy Liabilities” in the form of
unfunded pension and other liabilities. Alternatively, MUDs leave behind
“Legacy Infrastructure” to serve communities for decades to come.

Association of Water Board Directors -- Texas