Property Taxes 101: How can you protest the value of your home?
State leaders patted each other on the back Thursday afternoon and declared historic progress in the never-ending war on Texas property taxes.
But don’t strain your eyes looking for a tax cut on your next bill from the county.
The steps announced by Republicans Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — billions more in state funding for schools so local taxes can be reduced, rules to make it harder for local governments to increase revenue and big changes to how the state allocates money to school districts — should slow the skyrocketing levies that homeowners are seeing. But the reality is this: In a fast-growing state, with property values soaring and an aversion to certain types of taxes, real cuts are close to impossible.
Texas governments are funded primarily by property and sales taxes. A potential third major source of revenue, state or local income tax, is off the table. Texans have made it clear they don’t want one, and we have no quarrel with that. The lack of an income tax is a competitive advantage for the state and a natural limit on government.
Lawmakers also have been reluctant to tax businesses more. All that adds up to a heavy reliance on property taxes. Growth drives up property values, and Texas’ decades-long boom shows no signs of slowing. We just learned that Fort Worth has again moved up the list of largest U.S. cities, now ranking 13th. Tarrant County’s chief property appraiser has estimated that overall property values will rise as much as 10% once appeals are settled soon.
This has made life a little easier for local governments for years. They’ve been able to spend more and reduce tax rates. Even with crafty appeals of their property appraisals, homeowners and businesses still pay more to their cities, counties, hospital districts and — especially — school districts.
City and county leaders rightly fear the impact of tighter caps on their ability to raise revenue. Fort Worth Mayor Betsy Price warns that caps could mean budget cuts of several million dollars and a reduction in all city services beyond public safety.
With growth comes needs, particularly in education. We encourage school districts to look for savings, particularly in administrative costs. But more kids means more spending. Plus, Texas schools serve plenty of low-income families, and the state’s future depends on helping them become part of a competitive future workforce..
Property taxes just aren’t well-suited to fund extended, massive growth. After all, we’ve heard leaders claim victory before. In 2006, the Legislature slashed school tax rates by a third, replacing the revenue with increased sales and business taxes. Even now, rates are much lower than they were before the 2006 deal. But try telling that to homeowners.
Few options for a long-term fix exist. State leaders pledged that more state money would continue to flow so local taxes can be cut. That should help, but a general recession or a downturn in the oil and gas industries, another major source of state revenue, could make it difficult. Appraisal reform could be another useful tool, but it’s a complicated issue that demands deliberate consideration.
It was telling that Patrick, a longtime warrior on the tax issue, framed the matter as a “dramatic cut in future tax increases.” So, sure, give lawmakers credit for a step forward. Just wait to see if lasting relief materializes.