CRAYMER: Beware of Snake-Oil CoronaVirus 'Property Tax Relief'

Since home values typically increase, the only way property tax bills can go down is if local governments cut their property taxes rates

By Dale Craymer

AUSTIN, Texas (Texas Insider Report) — 
Are you tired of rising appraisal values driving up your property tax bill? Some chief appraisers around Texas are touting a path to “tax relief” for Texans suffering economically from the COVID-19 CoronaVirus pandemic: Freeze the value of your property for tax purposes at last year’s amount.

Bexar County (where San Antonio is located,) and Ellis County south of Dallas have already adopted resolutions calling on Gov. Greg Abbott to order just that – No more rising property tax appraisals, no more rising property taxes!

Unfortunately... they’re selling Snake Oil. Freezing your local property value does NOT freeze your tax bill because local property tax rates aren’t frozen, and that rate can still be increased. 

How much you pay in property taxes depends on how much your local governments want to spend in their annual budget each year. To raise that money its simple math: the total value of the appraised property in each taxing jurisdiction is multiplied by the tax rate they adopt, and that equals the annual budget they have to spend. This applies to your local MUD (Municipal Utility District,) the Community College District, Hospital District, and of course, your local ISD (Independent School District.)

Theses entities adopt and set the tax rates every year at poorly attended hearings. Those Tax Rates are then applied against your home's appraised Taxable Value, which determines the bottom line of your overall tax bill.
Since your home's value typically increases, the only way your overall property tax bill 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 (or the State Legislature) for it – but in reality, they are the ones responsible because they adopted the local tax rates that drive up your tax bills.

Freezing your taxable value is a false promise of "tax relief "– and 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 – and it’s also not legal. The Texas Constitution says property taxation must be “equal and uniform.”

It could also put our Texas Public School Finance system back in court over issues of "equity." If one school district is levying on last year’s values, its likely going to be “poorer” and qualify 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 in oirder to make everything equitable. That ends up hurting San Antonio’s schools. Differing values creates differing harms.

Austin taxpayers are in a somewhat similar boat right now, although not because of the CoronaVirus. This year the Travis County Chief Appraiser  in a snit with the Austin Board of Realtors over data sharing – refused to re-appraise single family homes. She did, however, reappraise all other properties such as apartments, restaurants, office buildings, etc.

That means when the local Austin taxing jurisdictions adopt their tax rates, business properties will subsidize homes that are essentially being assessed below the most recent possible market values. 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. But those lower limits don’t apply in a period of 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 CoronaVirus pandemic will take a toll on the finances of many local taxing jurisdictions. And, it may not be unreasonable at all that they will need some additional revenue.

But, hopefully tax increases will be a last resort – local taxing entities should first re-evaluate and priorituize the necessity of every dollar they spend.

Regardless, don’t expect your home's appraisal to lower or raise your tax bill. Your local elected officials make that choice when they set the tax rate, not your chief appraiser.

The key is to pay attention and participate in your local budget process. That is where your local property tax rates will be adopted. (EDITOR's NOTE - See CRAYMER: Angry About Property Taxes? Nows Your Chance to Tell Someone Who Cares.)

That’s the magic bullet to control your property tax bill. Dale Craymer is president of the Texas Taxpayers & Research Association (