Are you tired of rising appraisals driving up your property tax bill? Some chief appraisers around the state are touting a path to “tax relief” for Texans suffering economically from the COVID-19 pandemic: Freeze the value of your property for tax purposes at last year’s lower amount. Bexar and Ellis counties already have adopted resolutions calling on Gov. Greg Abbott to order just that. No more rising appraisals, no more rising property taxes!
Unfortunately, they’re selling snake oil.
Freezing your property value does NOT freeze your tax bills because local tax rates aren’t frozen. How much you pay depends on how much local governments want to spend. They set tax rates every year at poorly attended hearings to fund the budgets they adopt. Those rates apply against your taxable value and determine the bottom line of your tax bill. The only way property taxes will go down is if local governments cut the amount of property taxes they take in.
Although state law does give the governor a wide range of emergency powers, setting property values is not one of them. When your tax bills rise in October, local officials may try to blame the governor for not acting, but in reality, they’re the ones responsible because they adopted the tax rates that drove up tax bills.
Freezing your value is a false promise of tax relief. It’s also bad public policy.
Suppose you have new neighbors who just built a house next to you. Your home will be taxed at last year’s lower value, while theirs will be taxed at full current value. That’s not fair. It’s also not legal. The Texas Constitution says property taxation must be “equal and uniform.”
It could also put our public school finance system back in court over issues of equity. If one school district is levying on last year’s values, it is “poorer” and qualifies for extra state aid. That means, for example, taxpayers in Lubbock could have to pay for San Antonio’s property tax relief.
If the disparity in values gets too much out of whack, the state does have the ability to cut state aid payments. That ends up hurting San Antonio’s schools. Differing values creates differing harms.
Austin taxpayers are in a somewhat similar boat, although not because of the coronavirus. This year the Travis County chief appraiser, in a snit with the Board of Realtors over data, refused to re-appraise single family homes. She did reappraise all other properties – apartments, restaurants, office buildings, etc. That means when local Austin jurisdictions adopt their tax rates, business properties will subsidize homes that are assessed below market value. Assuming Austin and Travis County raise their property taxes 8%, as they did last year, Austin homeowners’ tax bills will go up 4% while business property owners will see a 12% increase.
You may recall those larger taxing units were supposed to be subject to a new 3.5% tax increase threshold, down from the 8% previously allowed in law. Those lower limits may not apply in a disaster such as we are in now. That means every local taxing jurisdiction, except schools, can raise property taxes by 8% this year.
No question the pandemic will take a toll on the finances of many local jurisdictions. It may not be unreasonable at all that they will need the additional revenue. But hopefully tax increases will be a last resort and localities will first re-evaluate the necessity of every dollar they spend.
But regardless, don’t expect your appraisal to lower or raise your tax bill. Your local officials make that choice, not your chief appraiser. Pay attention and participate in the local budget process where your tax rates will be adopted. That’s the magic bullet to control your property tax bill.
Dale Craymer is president of the Texas Taxpayers and Research Association (www.ttara.org), a non-profit, membership-supported organization of businesses and individuals interested in the state and local fiscal policies in Texas and the way those policies impact the economy.
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Kirsten Voinis, communications consultant, Texas Taxpayers and Research Association, (512) 922-7141, email@example.com. Twitter: @txtaxpayers
Dale Craymer, president, Texas Taxpayers and Research Association, 400 West 15th Street, Suite 400, Austin, TX, 78701, (512) 472-8838 (day), (512) 422-5480 (cell), firstname.lastname@example.org. Twitter: @txtaxpayers