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Home | Tag Archives: property taxes

Tag Archives: property taxes

How do Texas governments calculate your property taxes? Here’s a primer.

As Texas’ population boom fuels demand for more housing, the property values that drive tax bills are also rising. State lawmakers this legislative session want to slow the increase in property taxes that Texans pay each year — something they’ve been trying to do for years with little success.

That’s because property taxes are a huge revenue stream for local governments, whose officials say limiting their tax collection authority could hamstring what they budget for first responders, roads and other essential services.

Simply determining how much a Texas property owner owes in taxes is a complicated process involving multiple government entities — mainly cities, counties and school districts — and the final tax bite is largely determined by the appraised value of a property set by a local appraisal district.

As legislators prepare to spend the next several months debating how to keep property taxes from rising so fast, here’s a look at the process that determines how much property taxes Texas landowners owe their local governments each year.


Note: Because the appeal process can be expensive and involve attorneys’ fees, most property owners going this route are businesses.

Source: Texas Tribune research

Coming Thursday: A look at how local governments’ revenues determine tax rates.


The 86th Legislature runs from Jan. 8 to May 27. From the state budget to health care to education policy — and the politics behind it all — we focus on what Texans need to know about the biennial legislative session.


Senate Gives Initial OK to Property Tax Rate Elections in Cities, Counties

Texans could soon have more direct control over the property tax rates that cities, counties and special purpose districts set as legislation that stalled during the state Legislature’s regular session is taken up by both chambers this week.

The Senate in a 19-12 vote on Monday gave preliminary approval to a bill requiring larger cities, counties and taxing districts to have an election if the amount of property tax revenues they collect on existing property and buildings exceeds 4 percent of the amount they took in the year before. Smaller government entities — those that collect less than $20 million in property and sales tax a year — will have to hold an election if revenue collections exceed an 8 percent increase.

State Sen. Paul Bettencourt said his controversial Senate Bill 1 is key to “slowing down” rising property tax bills.

“The public knows if there’s a case that’s made from elected officials that they should spend more of their hard-earned money, they will vote for it,” the Houston Republican said Monday night.

Sen. Dawn Buckingham, R-Lakeway, successfully amended the bill to allow residents in smaller taxing units that collect less than $20 million in revenues — such as tiny towns or special purpose districts — to lower the property tax collection increase that triggers an automatic election from 8 percent to 4 percent. Texans in such small taxing units would vote to lower that threshold in May.

Bettencourt is optimistic that the Senate and House will agree on how to handle property tax rate elections during the special session. Their inability to do so during the regular session partially prompted Gov. Greg Abbott to call lawmakers back to work this summer.

“What I hope to have happen is a real negotiation,” Bettencourt told The Texas Tribune last week.

During the regular session, a proposed automatic tax rate election provision never made it out of the House Ways and Means Committee that State Rep. Dennis Bonnen chairs. Things could play out differently during the special session. Bonnen, R-Angleton, included an automatic election provision in his companion legislation, House Bill 4. He said a heightened focus on property taxes during the special session could prompt more of his colleagues to back such an election requirement.

“I think it’s going to be a little harder to sit back and not support something,” Bonnen said.

But not everyone shares his optimism. State Rep. Jonathan Stickland, R-Bedford, said Monday that he doesn’t think Texas House Speaker Joe Strauswants an automatic election provision to pass even though such a measure is in the House companion bill. HB 4 is among nearly three dozen property tax and appraisal bills that will be considered in that chamber’s Ways and Means Committee on Tuesday.

“I don’t think Straus wants to pass any of them,” Stickland said Monday. “My plan is to keep pushing so we know who is responsible for their death.”

Tea Party-aligned lawmakers and officials, including Stickland, have repeatedly criticized the Republican speaker for how he runs the lower chamber. But Straus spokesman Jason Embry said property tax legislation is a priority for the speaker.

Embry also said the House attempted to lower property taxes in the regular session by putting less of a financial burden on school districts. The lower chamber passed House Bill 21, which sought to increase state education funding by $1.5 billion. The bill died after the Senate lowered that amount and tacked on an amendment that would have would subsidized private school tuition and homeschooling for kids with disabilities.

“School districts collect more than half of the property taxes paid in Texas, and the House is the only body that has acted to address the most significant driver of higher property taxes,” Embry said.

Meanwhile, critics of Bettencourt’s election requirement say it will hamstring local governments’ ability to respond to residents’ demands for services like police and fire personnel, street repairs and timely trash collection. They also point to it as another example of state officials trying to micromanage local governments.

Bill Longley, legislative counsel for the Texas Municipal League, said this weekend at a Senate committee hearing that the legislation would harm local governments’ bottom line while failing to offer Texans substantial savings.

“Taxpayers will not see meaningful relief,” he said. “We’re talking about a very small portion of the city tax bill.”

He also said the biggest driver of property tax increases are from school districts and not cities or counties. Several city and county officials say that lawmakers are using the city and county property tax issue as a way to distract from their practice of spending fewer state dollars on education, which prompts school districts to raise their property tax rates to make up the difference.

“The state’s own budget is based on the largest portion of property taxes — school property taxes — increasing,” Longley said.

Bonnen’s version triggers a vote when increased revenues exceed 5 percent. But Bettencourt isn’t sweating that slight 1-point difference between the two versions. Both lawmakers also opted to separate property tax rate elections and overhauling the property appraisal process in legislation during the special session. They said having more bills to address property taxes increases the chances of legislation passing during the special session.

“It’s just important to have a few vehicles that can be used as necessary because you don’t have time to start the whole process again,” Bettencourt said.

Bonnen said his proposed overhaul of the appraisal and assessment process will make it clear to Texans which government entities are causing tax bills to increase. Bonnen said some local officials don’t lower tax rates to offset property value increases and then blame higher individual tax bills on those rising property values.

“You still have a local elected official making a choice that makes you pay more,” he said.

Bettencourt’s Senate Bills 93 and 96 have provisions that also seek to make it more clear to landowners what tax rates different entities charge and what could trigger an automatic election. Those have yet to make it out of the Senate Select Committee on Government Reform.

That committee, which Bettencourt chairs, heard hours of testimony on property tax legislation Saturday. Bettencourt kicked off the hearing by rolling through a PowerPoint presentation purporting to show soaring property taxes across Texas, citing statistics that some experts have called fuzzy math that takes statistical comparisons out of context.

Sen. Van Taylor, R-Plano, said his office had received 434 pages of letters from constituents complaining about property taxes, with some saying they were in danger of losing their homes due to rising taxes. Taylor grew emotional as he read excerpts from the letters.

“The purpose of government is to protect our God-given rights, it’s not to tax us out of our homes,” Taylor said.

Some current and former local officials said they supported Bettencourt’s property tax legislation, SB 1. Ron Wright, tax assessor-collector in Tarrant County, said it would offer relief and more transparency to taxpayers. And he dismissed criticism from those who call the bill an assault on local control, citing the ability of citizens to vote on tax increases.

“When they talk about local control, they’re talking about government control,” Wright said of the bill’s critics.

Andy Duehren, Emma Platoff and Shannon Najmabadi contributed to this report.

Disclosure: The Texas Municipal League has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

Read related Tribune coverage:

  • The lower chamber responded to Lt. Gov. Dan Patrick’s threats of a special session by moving key legislation — but omitting provisions that he wanted included. [link]
  • There’s a simple test to tell you whether the promise of a tax cut is really a tax cut: Is there money in your hand? [link]
  • The Senate voted 18-12 in favor of bill that would require an election if a local government entity wanted to increase some of its tax collections by 5 percent or more. [link]


Analysis: Why Rising Property Values don’t Lower School Taxes

Rising property values in Texas should have lowered school property tax rates. But they didn’t, and you can thank the folks who write the state budget for that.

When your property values rise, your school property tax rates are supposed to fall, right?

That might be how you want it to work, but it’s not the way school finance actually works in Texas.

Over the past decade, the Legislature has sopped up the benefits of rising property values to pad the state budget, forcing school districts to forgo cuts in property tax rates to make up the difference. All the while, legislators have made political hay of rising property tax bills, blaming the local districts that now pay a good chunk of the state’s share for public schools.

Taxable school property values rose 67.2 percent from 2005 to 2014, from $1.22 trillion to $2.03 trillion, according to the state’s Legislative Budget Board and the comptroller of public accounts. Some of that was growth — new houses and buildings and whatnot — and part of it was demand for what was already here.

Over the past couple of decades, with a single exception, taxable school property values in Texas have risen every year. It quickly rebounded from a small property value decline in 2004. No news there. It’s a boom state, a Texas Miracle — whatever you want to call a period of steady growth and success.

But steadily rising Texas property values haven’t translated into what could have been a steady drop in school property tax rates. In fact, school tax bills have shot up over a decade when much more modest increases were required — largely because state lawmakers decided the benefits of rising values should go into the state’s budget instead of taxpayer pockets.

Taxpayers are mad about it. State officials, sensitive to taxpayer anger, have proposed reining in school boards and other local governments — city councils, county commissions, hospital districts and the like — by forcing them to go to voters whenever they raise taxes more than 4 percent in a single year.

A few have proposed fixing the other end of the school finance seesaw by barring the state from sweeping up the benefits of rising property values to balance its own budget. State Sen. Kirk Watson, D-Austin, has re-filed legislation that would bar the state from lowering its spending when property values rise. In 2015, that idea never got a committee hearing. Other lawmakers have proposed requiring the state to pay at least half the costs of public education.

School finance is complicated enough to give a regular human a headache, but this part of it is simple. The state pays part, the federal government pays part and the local government pays the rest. The local government’s piece comes from property taxes. If property values are low, tax rates have to be relatively high. If values rise, the rates can drop.

The owner of a $200,000 property with a tax rate of $1 per $100 of value would pay $2,000 in taxes. To raise the same $2,000 in taxes on a $250,000 house, the rate would only have to be $.80 per $100.

But tax rates in Texas have tended to stay up even as property taxes rose — even as overall spending per student remained relatively flat.

The culprit — that would be the state — is evident in the numbers. In 2008, the state took responsibility for 44.9 percent of the total cost, or about as much as the local districts spent. Now, the locals are paying 51.5 percent to the state’s 38.4 percent.

State legislators took advantage of rising property values to avoid raising state taxes — shrinking the state’s share and forcing property-tax-dependent local schools to keep rates high to make up the difference. State spending on a per-student basis is lower than it was 10 years ago, while local spending has risen to make up the difference and also to cover relatively small increases in overall spending.

The alternatives might be unpleasant — raising state taxes on purchases and other things to offset cuts in property taxes. Lawmakers have done that before, but they nearly always renege on promises to hold up their end of the deal. After they reworked business franchise and other taxes and lowered property taxes in 2006, the state and local shares of school expenses were about equal.

When property taxes rose, state budget writers didn’t adjust, shifting the load to local taxpayers. And now, those legislators are blaming the locals for all that extra weight.

More columns from Ross Ramsey:

  • Had the state kept its share of school funding constant for the past 10 years, voters might not be griping about rising property taxes. The state is spending more than it used to, but it’s spending less per student.
  • It’s hard to get property tax relief out of a state government that does not levy a property tax. But it’s tempting turf for politicians in Texas, and they’re going to try again when they meet in January.
  • If they were only listening to voters, Texas Republican lawmakers could cast stress-free votes on a proposed bathroom bill. That’s also true if they were only listening to businesses. But voters and businesses don’t want the same thing.

Author: ROSS RAMSEY –  The Texas Tribune

Editor’s note: If you’d like an email notice whenever we publish Ross Ramsey’s column, click here.

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