Where Do Property Taxes Go? Schools, Debt and How to Appeal

The short answer: most of your bill funds schools and local government

If you own a home, your property tax bill is really several bills stacked together. Depending on where you live, it combines levies from the school district, the county, the city, and sometimes a community college, a hospital district or a special utility district. In most states the school district takes the biggest share.

That is the starting point for a video from the channel Michael Bordenaro Clips, published November 5, 2026. The creator argues that the school share is large, that a big part of it services borrowing rather than classrooms, and that the system should be replaced with a statewide sales tax. The first claim is broadly consistent with how local finance works. The second and third are far more contested.

This article separates what is checkable from what is opinion, then walks through how to read your own bill and challenge your assessment. For background on why bills climb even when prices flatten, see our explainer on why property taxes keep going up even when home values stall.

What the video claims, in numbers

Michael Bordenaro Clips was responding to a viewer who asked what could justify eliminating property taxes beyond homeowner self-interest, and how towns and schools would make up the revenue. The figures he gives are below. None are sourced on screen in this clip.

The creator also says school districts have "run the debt so high" that money goes to interest rather than operations, and that a required sinking fund does not exist. He describes school districts as insolvent. These are strong assertions, and the clip does not show the documents behind them.

How a school tax bill is actually split

To evaluate the "where does the money go" question, it helps to understand how school taxes are structured. In Texas, which is the creator's frame of reference, a district's tax rate has two parts:

• Maintenance and operations (M&O): pays teachers, utilities, buses, supplies and day-to-day costs.
• Interest and sinking (I&S): pays principal and interest on voter-approved bonds used to build and renovate schools.

Many other states use similar structures under different names, such as general fund levies and debt service levies. The "sinking fund" the creator mentions is the account into which debt-service taxes are deposited so bond payments can be made on schedule.

This is where the creator's argument has a real kernel. Voters in many districts approve bonds, and the debt service on those bonds is paid from property taxes. In fast-growing areas, bond debt can be a meaningful part of the bill. But debt service is not hidden. Bond elections are public votes, official statements are filed with state regulators, and annual audits report outstanding debt and the debt service fund balance.

If you want to verify the claim for your own district, look for three documents: the adopted budget, the annual audited financial report, and the most recent bond election materials. Together they show how much of your rate is M&O versus debt service, and whether the debt fund balance covers upcoming payments.

Counterpoints and limits to the creator's view

A fair reading has to note where the video outruns the evidence.

Debt is not the same as fraud. Borrowing to build schools is legal and typically voter-approved. A district can carry heavy debt and still make every payment. Whether the debt level is wise is a legitimate debate, but "insolvent" has a specific legal and accounting meaning that the clip does not demonstrate.

Federal and state aid does not prove insolvency. Most public school systems receive state and federal money by design. Nationally, state and local sources provide the bulk of K-12 funding, and the federal share is usually a modest slice. The Census Bureau's annual school finance survey and the National Center for Education Statistics publish these breakdowns. Outside funding mostly reflects how states equalize resources between wealthy and poor districts.

The sales tax comparison has holes. The creator cites Montana as an example of a state that could run on a 9% rate. Montana is widely known for having no statewide general sales tax, so that comparison needs clarification before anyone relies on it. Sales taxes are also more volatile than property taxes during recessions and fall more heavily on lower-income households unless exempted for necessities.

The projections are self-generated. The $9.5 billion Denton County figure and the 15%-then-11% schedule come from the creator's own work. A rival state senator's estimate is described as much higher. Neither can be assessed from the clip, so independent analysis from a state comptroller, legislative budget office or nonpartisan think tank would be needed.

Rate-setting claims are speculative. The video argues mortgage rates cannot fall because rates reflect bond risk. Mortgage rates respond to many factors, including inflation expectations, Federal Reserve policy and investor demand for mortgage-backed securities. Freddie Mac publishes the weekly Primary Mortgage Market Survey for readers who want to track actual rates.

The video's language about civil strife and global depression is rhetorical rather than analytical, and it should not guide any household financial decision.

The sales tax replacement idea, and the equity point

The creator's central proposal is to eliminate property taxes, appraisal districts and tax collectors, and fund schools through a uniform state sales tax with spending visible through the state comptroller's check register. He argues that homeowners would then keep their equity and have a paid-off house as a retirement asset.

Supporters of property tax elimination make a related point that holds up: for owners on fixed incomes, rising assessments can force sales even when the mortgage is paid off. That is why many states offer homestead exemptions, assessment caps and senior freezes. Florida's recent change is one example, covered in our look at what Amendment 3 means for Southwest Florida homeowners.

Critics respond that property taxes are stable, hard to evade and tied to local services, while a switch would shift costs toward renters and consumers. Rental housing owners would pay less, and whether those savings reach tenants is uncertain. Any replacement would also require a constitutional amendment in many states. This is a legitimate policy debate with trade-offs on both sides, and it is not settled by one video.

One more clarification on the creator's equity argument: for homeowners with a mortgage, property taxes are usually collected through an escrow account alongside the loan payment. Rising taxes increase the monthly payment but do not reduce the principal owed. The loan still amortizes on its original schedule.

How to read your own property tax bill

You do not need to adopt a theory of the system to learn where your money goes. A few steps help:

1. Find the line items. Your bill or your county's online tax portal lists each taxing unit and its rate. Add up the rates to see which unit takes the largest share.
2. Separate operating from debt. Many bills show a split, or your school district's budget page does.
3. Check your exemptions. Homestead, senior, disabled-veteran and similar exemptions are not always applied automatically.
4. Compare assessed value to market value. If the assessed value is well above what similar homes sold for, you may have grounds to challenge it.
5. Read local budget hearings and bond notices. Taxing units must publish proposed rates, and this is the point where residents can speak.

State resources help. The Texas Comptroller, for example, publishes property tax guidance for homeowners, and most state revenue departments offer something similar.

How to appeal an assessment

You cannot appeal the tax rate directly, since rates are set by elected boards and sometimes by voters. You can contest the assessed value, whether the property is classified correctly, and whether exemptions were applied.

• Watch the deadline. Appeal windows are short and vary by state and county. In Texas, protests are generally due by mid-May or within about 30 days of the notice, but confirm the date on your own notice.
• Gather comparables. Recent sales of similar homes nearby, plus photos and repair estimates for condition issues, are the strongest evidence.
• Check for factual errors. Wrong square footage, bedrooms or lot size are common and easy to correct.
• Try the informal review first. Many offices resolve disputes before a formal hearing.
• Know the next step. If you disagree with the outcome, a review board hearing is typically the next level, and some states allow further appeals.

Be cautious with firms that charge a percentage of savings. They can be useful for some owners, but you can usually file on your own for free.

What this means for you

Buyers. Estimate taxes using the likely reassessed value after a sale, not the seller's current bill, since many areas reset assessments on purchase. Ask which taxing units apply, whether voters recently approved bonds, and whether a special district adds a separate charge. Add the tax to your monthly payment calculation and compare it with rent; our piece on renting affordability in 2026 offers context.

Sellers. Be ready to explain the tax bill to buyers, and confirm exemptions were properly applied. A recent successful appeal is worth documenting.

Current owners. Review your notice every year, file for every exemption you qualify for, and calendar the appeal deadline. If you escrow, check your annual analysis, since a tax increase can raise your payment. Households that struggle with rising carrying costs should talk to their lender or a housing counselor early; see our reporting on rising foreclosures and bank repossessions for why early action matters.

This article is general information, not tax or legal advice. Rules differ by state and county, so check your local assessor and tax office.

What to watch next

Watch for local budget hearings, proposed rate notices and any bond elections in your district. Track state legislative sessions for assessment caps, exemption expansions or sales-tax-swap proposals, and look for independent fiscal analyses that test the numbers circulating online.