Texans Face Tough Choice On Property Taxes
Texas is the southern state with the highest real estate taxes, and
Bettencourt suggests Prop1, as the voters opportunity to lower property taxes
Property taxes in Harris County once again have made headlines as appraisal increases of 15% or more have become increasingly common. While Texas enjoys no state income tax, and our registration fees are several times less than other states, our property tax rates are some of the highest in the nation. Several politicians, led by Lt. Governor Dan Patrick, were swept in years ago promising property tax relief, their attempts weren't adopted by the majority of Texas legislators.
Texas is currently in the middle of a housing boom, fueled by the largest migration from other states we have seen in decades. Texas has increased in population by more than a million in less than five years. A majority of the new residents are from other states more so than other nations, but the extra population is putting a strain on cities and school districts. Raising property taxes is one of the quickest ways to raise the funds.
In Harris County the tax rate is set by two different government agencies. The Appraisal District determines the value of your property, while the Harris County Tax Board sets your tax rate. While they are independent of each other, an increase by either can greatly increase the amount you are paying. You are however allowed to appeal any increase in your appraisal by filing a protest with the Appraisal District.
Past the appraisal protest, the best chance for tax relief will come from either the courts or the state legislature. 600 school districts filled a suit in 2011 demanding a better more stable method of funding than property taxes. The districts are claiming that property taxes do not do enough to fund their needs, the case is pending still in the courts.
The legislature has several methods that have been adopted. State Senator Paul Bettencourt helped place a measure on the November ballot that, if adopted, would make the first $10,000 dollars on a homestead exempt from from school property taxes. This would save between four to five thousand dollars over a homeowners life. The legislature also change the requirement of all taxing jurisdictions to needed a super majority, or 60% of the vote to raise taxes over the previous year's level. This means the City of Houston would need eleven votes to raise taxes, instead of the current nine votes needed. Governor Perry's franchise tax was cut by 25%.
Bettencourt commented on the current tax situation in Houston, saying that property tax rates are extremely high. “The Heights are getting plastered. Average increase for residential is 15%, Heights 20%. Medical Tower 20%. You can pay off the banker in 30 years but never your tax man. We can't just keep increasing people's tax double digits every year.”
When asked how the state and school districts could ease the burden he suggested going to zero based budgeting. Set all budgets in the state and local governments to zero each year, and each proposal to the budget must be justified. It would catch a lot of waste and redundancy in the system, especially the two largest school districts, Houston and Dallas.
Changing how schools are allocated funds by sheer average attendance to more a comprehensive need basis was suggested. Ideas like Ann Richards' lottery was poorly thought out and executed. “Funding school districts through a state lottery just was not a rational funding stream” Bettencourt said.
With the Texas Legislature in recess until 2017, the only upcoming opportunity to change property tax laws will be Prop 1 on the November ballot. The trade off for lower property taxes is less funding for education.
Both of those issues will have to be addressed the next time the lawmakers return.
You can view the ballot for yourself here >>