CRAYMER: Worried About Your Property Tax Bill? Now is the Time to Act!

Since home values typically increase, the only way to cut your property tax bill is if local governments cut the property tax rates​​​​​​

By Dale Craymer

AUSTIN, Texas (Texas Insider Report) —
 Texas local governments are getting ready to adopt their budgets for the upcoming fiscal year. That means they’ll soon be setting the tax rates that will determine the size of your property tax bill.

Property taxes aren’t like sales and income taxes – taxes in which a permanent rate is set in law. Property tax rates are set each year based on the amount of money jurisdictions desire to raise to finance their budgets.
Forget your appraisal; if your tax bill is going up, it is most likely because the jurisdictions in which you reside are raising and spending more money.

State law actually defines a property tax increase as a tax rate that raises more in property taxes than last year. That means jurisdictions are expected to lower their tax rates as appraisals grow; otherwise, they are raising taxes.

In Texas’ largest counties (the two dozen with populations in excess of 200,000), taxpayers now have new information available to them so they can make an informed judgement over the level of taxes they pay. (The rest of the state follows next year). Most Texas property owners have by now received a notice in their mailboxes directing them to a new website. This site shows your appraised value, less exemptions, and, for each jurisdiction in which your property is located, three different tax rates:
  1. the No-New-Revenue Rate,
  2. the Voter-Approval Rate, and
  3. the Proposed Rate.
The website also will show you how much tax you would owe under any of the three rates. If you’re not sure how to find the website, contact your County's Central Appraisal District.

The No-New-Revenue Rate is the jurisdiction’s tax rate that would raise the same amount of tax revenue as in the previous year (previously called the “effective tax rate”).

If a jurisdiction’s values are increasing, the No-New-Revenue rate will be less than last year’s tax rate, and vice-versa. If a jurisdiction saw values rise by 10%, the No-New-Revenue Rate should decrease 10%.

While the No-New-Revenue Rate is probably something of a lower bound for your tax bill, it is a useful benchmark, as any tax rate higher than that is a tax increase.

The Voter-Approval Rate is probably something of a political upper bound. If a jurisdiction adopts a higher rate, voters must approve it in an automatic election.

The Voter-Approval Rate essentially allows a jurisdiction to raise either 3.5% more in property taxes for most large jurisdictions, or 8% for most others. Any jurisdiction subject to certain disaster declarations can raise taxes by 8%, so many may seek to do so during the current pandemic.

Ultimately, it may take a ruling by the Attorney General to make a final determination on the issue.

The Proposed Rate is the actual rate taxing units propose to adopt to finance their budget needs, and the one which will show up on your tax bill.

If it’s higher than the No-New-Revenue rate, your rising tax bill is a function of the jurisdiction’s desire to raise taxes. If it’s higher than the Voter-Approval Rate, you’ll have the opportunity to vote to limit the tax increase to no more than 3.5%.

The information received with the Real Time Tax Notice is more transparent than what property owners have ever received. But information is useless without action.

Budget discussions are beginning, and now is the time to get involved in the process.

Remember to look at both the tax rate and the revenue the tax rate raises to understand how the taxing unit may be increasing your taxes.

Dale Craymer is the President of the Texas Taxpayers & Research Association. Carl Walker is a Senior Analyst for the Association.