The Tax Man is Lurking in the Shadows. Get Your Flashlight On!
PART III of “The Craymer Series”: There is no permanent Property Tax Rate. New Rates are set each year at about this time of year, and It’s those Tax Rates that determine your actual Property Tax Bill.
By Dale Craymer
Texas Insider Report: AUSTIN, Texas — You got your appraisal notice a while back. Even though Austin is one of the nation’s hottest real estate markets, you may have thought your appraisal was high. Or maybe you just figured that the lower your value is, the less your property tax bill.
In either event, you may have decided to protest your value. You may even have gone before the appraisal review board. Perhaps you were successful in shaving a few percentage points off of your appraisal.
That feels great. You fought the law and won!
Don’t rest on your success. It could cost you.
All your tax appraisal really does is determine how big your slice of the property tax pie will be. You might feel good that your slice will be a bit smaller, but if the pie is a lot bigger, you’re still looking at a bunch more calories on your plate.
- READ Part I of “The CRAYMER Series”: Replacing Property Taxes with Higher Sales Tax Doesn’t Add Up (Misleading policy talk, unrealistic dreams won’t Eliminate your Property Taxes)
The size of the pie will be determined by the budgets of the various local districts that show up on your Property Tax Bill:
- A School District (ISD’s)
- the County
- Your City, and
- A myriad of Special Purpose Districts,
- such as Municipal Utility Districts (or MUD’s)
- Community College Districts
- Hospital Districts, just to name a few.
Their spending projections and needs for the new year approaching will determine how much tax revenue they’ll have to raise — and correspondingly, the tax rates applied to your appraisal will be set, by them, in order to raise what’s needed to fund their budget.
The property tax is unlike any other tax you pay — there is no permanent tax rate. Rates are adopted each year based on the budget desires of the taxing units. It is those tax rates that determine your property tax bill.
And that will soon start happening across the state.
This week Appraisal Districts must tell local taxing units the value of the property under their jurisdiction. By August 7, taxing units must calculate and publish their “Effective Tax Rate,” and other information.
The “Effective Tax Rate” is the tax rate, which when applied to this year’s property tax base would raise the same amount of tax revenue as last year (new construction is excluded from the calculation so that growth may pay for itself).
For example, if a taxing unit saw its property values increase by 10% over last year, the “Effective Tax Rate” would be 10% lower than the tax rate you paid last year.
Essentially, the “Effective Tax Rate” is the “no-new-taxes” tax rate.
If a taxing unit wants to raise more money than last year, it will need to increase taxes and adopt a tax rate higher than the “Effective Tax Rate”.
Now that’s a tax increase, and if they want to do that, they must schedule two public hearings (only one for School Districts or Water Districts,) to give constituents an opportunity to voice their opinion. Further, the motion to adopt a higher tax rate requires officials to publicly acknowledge they are raising taxes, and a 60% super-majority of the governing board must approve it.
- READ Part II of “The CRAYMER Series”: The Property Tax is a Sieve; Plugging One Part Just Moves the Leak Elsewhere
If you’re concerned about your impending property tax bill, these hearings are more important than your appraisal. Unfortunately, they take place in the dog days of summer or in the midst of back-to-school activities, and are poorly attended (rates generally must be adopted by September 30). And if there are six different taxing units on your tax bill, that means six different public hearings.
Fortunately, you can make your voice heard by picking up the phone or shooting off a couple of emails.
Last session the Texas Legislature considered a bill that would have greatly illuminated the black box of property tax. Had the bill passed, you would be able to go on-line or get from your County Tax Assessor-Collector a real time tax notice that would take your final appraisal and show exactly how much tax you would owe to each taxing unit based on the tax rates they were proposing to adopt.
That would be compared to the “no new taxes” tax rate so you could see exactly how much more (or less) in taxes each and every taxing unit wanted from you. You would have that information BEFORE those rates were adopted. You could then either attend the tax hearings in person, or contact the officials directly before they act.
That bill failed to pass, but the concept remains alive.
I offer kudos to Travis County Chief Appraiser Marya Crigler, which includes Austin, Texas. She thought the more transparent tax notice would help her constituents, so she’s now working to put that real time tax notice on-line. Travis County property owners will be able to see who wants to raise their taxes and by how much, and will be able to act in advance of the rates being adopted.
Property taxes rise in large part due to complacency. Local officials constantly hear from constituents who want a new park in their neighborhood, or perhaps a new road, or this or that. Those things cost money.
But if they don’t hear from the people who are not only concerned, but also frustrated by the ever-increasing upward spiral of Property Taxes, your local ISD, County, City and other budgets — and your taxes that support them — are almost certain to increase.
They will provide the starting point for what promises to be a fascinating debate during the 2019 Legislative Session.
The post CRAYMER: Property Tax Rates Are About to be Set Across Texas — Get Involved! appeared first on Texas Insider.
Source: Texas Politics