Mud (municipal utility district) An organization authorized to provide water, sewerage, waste management, and other services in MUD boundaries. The publicly elected board of director manage MUD. The organization can charge you necessary fees, texas, in order to provide district facilities and services. MUD tax varies according to property value and the area. Other than the above services MUD also provides many other services from generating electric to recreational services, school parks, and athletic courts. Texas has more than 1,200 special districts, many of which are located outside of city limits where there are no municipal services. Municipal Utility Districts are funded through bonds. Homeowners then pay off those bonds through MUD tax. As the debt decreases, MUD taxes may also decrease over time. MUD tax rates, like all property tax rates, vary according to property values and debt requirements. MUD rates generally decline over time as the MUD is built out and operating and debt service costs are shared by more homeowners.