Texas homeowners are spending a large portion of their income on financing state and local government operations. We
do not have, nor do we ever need, a state income tax in Texas, although the property tax has almost become its
substitute. The property tax has fueled the growth of government without real representation of those that are being
taxed. The property tax is a massive revenue generator allowing school districts and local governments to grow
unchecked at the expense of homeowners.
There are many shifting parts to a property owner’s property tax bill. There is the Tax Rate side and an Appraisal side.
The Tax Rate side is where property owners likely pay a separate tax to their school district to retire voter-approved debt;
they pay a county tax; probably a city tax; and a number of property taxes to a handful of special districts. While the state’
s 1,026 school districts are by far the largest users of the property tax, they are joined by 1,056 cities, 254 counties, and
over 1,500 special districts.
Among these taxes are the school district maintenance and operations taxes, which account for about 53% of the taxes
collected on the Tax Side of the property owner’s property tax bill.
In 2006, the Texas Legislature targeted the maintenance and operations tax for the operation of schools. The Texas
Legislature reduced the amount each district could receive for maintenance and operations.
The 2006 reform package mandated that local school districts reduce their maintenance and operations tax rates in effect
for 2005 by one-third over the next two years (debt service taxes were not affected). For 2006, maintenance and
operations rates were to drop by 11.33 percent, with added cuts in 2007 bringing the total two year reduction to 33.33
percent.
However, the tax relief legislation gave school districts the authority to raise taxes for local enrichment purposes above
their compressed target tax rate. If districts had not been given some degree of local discretion over their ultimate tax
rate, the courts would likely have viewed the result as a state property tax—something prohibited under the Texas
Constitution.
Whether total property taxes would rise or fall depended in large measure on what cities,
counties, and special districts would do. These should have been contemplated if a lasting tax relief proposal was going
to be implemented.
Reasons why property owners did not see a tax decrease due to inefficient planning of legislation:
1. Almost all school districts have exercised their local authority to increase tax rates above the
state-mandated one-third reduction,
2. Local voters have approved additional debt service taxes to improve school facilities,
3. Property values continue to rise, and
4. City, county, and special district taxes have continued to increase.
Adding to the ability to circumvent the legislation, are the dynamics of the Appraisal Side of the property owner’s
property tax bill.
Overburdened property owners are being overwhelmed by Appraisal Creep. “Appraisal Creep” is defined as the
continual increase of property values by the appraisal districts.
Local taxing units such as school districts, counties, and cities that set property tax rates are comprised of elected
officials and are therefore accountable to voters.
The appraisal districts, however, have as much influence over property tax bills as the local taxing units, yet they are
unelected and unaccountable. Property values are increasing faster than household income creating taxation without
representation.
Pertinent reasons why property appraisals are rising are:
1. Appraisal districts must report to the Texas Comptroller annually and must be within 5% of the
market value of the property. The appraisal district usually appraises on the high side to avoid
penalties if they are outside of the 5% parameter.
2. The appraisal district is only required to set the property value once in a three year period. A
yearly property value adjustment happens because the Comptroller is required to report on a
yearly basis.
3. Appraisal districts are not directly responsible to voters.
4. Currently, under Section 23.23 of the Texas Tax Code, a 10% cap exists to limit the annual
increase in appraised value of a residence homestead.
Solutions:
1. Establish appraisal district boards that are made up of elected property owners of the particular
district, instead of appointees made up of local officials. This would make the elected board
members more responsive to the district’s residents and less responsive to government officials.
Unelected officials have no incentive to be responsive to the taxpayer. The honor of serving as a
member of the directors of Texas appraisal districts is granted to them not by the people, but by
the taxing entities that appoint each director. Therefore appraisal district directors’, “loyalty and
diligence to benefit the common good”, are just as likely to go to the entities benefiting from the
tax as they are to go to the property owners being taxed. Therefore, appraisal district directors
serve the taxing entities, leading to the unreasonable and unsustainable rise in appraisals.
Therefore, the best way to ensure responsiveness is to have elected property owners of the
district be the directors, not the leaders of the taxing authorities, as that would tend to be
self-serving.
Accountability must be brought to the appraisal process, which is the root cause of rising property
taxes. As maintenance and operation rates fall, the pressure to maintain the growth of property
tax revenues through the appraisal process will only increase. This pressure is most likely to be
resisted by elected property owners who are answerable and accountable to voters.
Therefore, Section 6.03 of the Tax Code should be amended so that the property owners of each
district are elected to the appraisal district board of directors.
2. Do not establish appraisal or revenue caps. These measures are too restrictive for a rapidly
growing state and fast expanding local infrastructure. The cap is just a substitute for responsive
appraisal boards. Solution #1 should eliminate the need for caps.
do not have, nor do we ever need, a state income tax in Texas, although the property tax has almost become its
substitute. The property tax has fueled the growth of government without real representation of those that are being
taxed. The property tax is a massive revenue generator allowing school districts and local governments to grow
unchecked at the expense of homeowners.
There are many shifting parts to a property owner’s property tax bill. There is the Tax Rate side and an Appraisal side.
The Tax Rate side is where property owners likely pay a separate tax to their school district to retire voter-approved debt;
they pay a county tax; probably a city tax; and a number of property taxes to a handful of special districts. While the state’
s 1,026 school districts are by far the largest users of the property tax, they are joined by 1,056 cities, 254 counties, and
over 1,500 special districts.
Among these taxes are the school district maintenance and operations taxes, which account for about 53% of the taxes
collected on the Tax Side of the property owner’s property tax bill.
In 2006, the Texas Legislature targeted the maintenance and operations tax for the operation of schools. The Texas
Legislature reduced the amount each district could receive for maintenance and operations.
The 2006 reform package mandated that local school districts reduce their maintenance and operations tax rates in effect
for 2005 by one-third over the next two years (debt service taxes were not affected). For 2006, maintenance and
operations rates were to drop by 11.33 percent, with added cuts in 2007 bringing the total two year reduction to 33.33
percent.
However, the tax relief legislation gave school districts the authority to raise taxes for local enrichment purposes above
their compressed target tax rate. If districts had not been given some degree of local discretion over their ultimate tax
rate, the courts would likely have viewed the result as a state property tax—something prohibited under the Texas
Constitution.
Whether total property taxes would rise or fall depended in large measure on what cities,
counties, and special districts would do. These should have been contemplated if a lasting tax relief proposal was going
to be implemented.
Reasons why property owners did not see a tax decrease due to inefficient planning of legislation:
1. Almost all school districts have exercised their local authority to increase tax rates above the
state-mandated one-third reduction,
2. Local voters have approved additional debt service taxes to improve school facilities,
3. Property values continue to rise, and
4. City, county, and special district taxes have continued to increase.
Adding to the ability to circumvent the legislation, are the dynamics of the Appraisal Side of the property owner’s
property tax bill.
Overburdened property owners are being overwhelmed by Appraisal Creep. “Appraisal Creep” is defined as the
continual increase of property values by the appraisal districts.
Local taxing units such as school districts, counties, and cities that set property tax rates are comprised of elected
officials and are therefore accountable to voters.
The appraisal districts, however, have as much influence over property tax bills as the local taxing units, yet they are
unelected and unaccountable. Property values are increasing faster than household income creating taxation without
representation.
Pertinent reasons why property appraisals are rising are:
1. Appraisal districts must report to the Texas Comptroller annually and must be within 5% of the
market value of the property. The appraisal district usually appraises on the high side to avoid
penalties if they are outside of the 5% parameter.
2. The appraisal district is only required to set the property value once in a three year period. A
yearly property value adjustment happens because the Comptroller is required to report on a
yearly basis.
3. Appraisal districts are not directly responsible to voters.
4. Currently, under Section 23.23 of the Texas Tax Code, a 10% cap exists to limit the annual
increase in appraised value of a residence homestead.
Solutions:
1. Establish appraisal district boards that are made up of elected property owners of the particular
district, instead of appointees made up of local officials. This would make the elected board
members more responsive to the district’s residents and less responsive to government officials.
Unelected officials have no incentive to be responsive to the taxpayer. The honor of serving as a
member of the directors of Texas appraisal districts is granted to them not by the people, but by
the taxing entities that appoint each director. Therefore appraisal district directors’, “loyalty and
diligence to benefit the common good”, are just as likely to go to the entities benefiting from the
tax as they are to go to the property owners being taxed. Therefore, appraisal district directors
serve the taxing entities, leading to the unreasonable and unsustainable rise in appraisals.
Therefore, the best way to ensure responsiveness is to have elected property owners of the
district be the directors, not the leaders of the taxing authorities, as that would tend to be
self-serving.
Accountability must be brought to the appraisal process, which is the root cause of rising property
taxes. As maintenance and operation rates fall, the pressure to maintain the growth of property
tax revenues through the appraisal process will only increase. This pressure is most likely to be
resisted by elected property owners who are answerable and accountable to voters.
Therefore, Section 6.03 of the Tax Code should be amended so that the property owners of each
district are elected to the appraisal district board of directors.
2. Do not establish appraisal or revenue caps. These measures are too restrictive for a rapidly
growing state and fast expanding local infrastructure. The cap is just a substitute for responsive
appraisal boards. Solution #1 should eliminate the need for caps.
| Real Property Tax |
| Pol. Ad Paid for by the Campaign to Elect Fran Cavanaugh Governor Brent Williams, Treasurer P.O. Box 1231, Allen, TX 75013 (C) Copyright 2010 Cavanaugh Campaign ~ All Rights Reserved Worldwide |
