By Christopher Woolsey
Each year the central appraisal district will send out thousands of notifications informing property owners that their appraisals have increased. It’s easy to understand why many Texas homeowners and businesses are rightfully worried about these appraisal increases, and the subsequent tax increases. While serving on the Corsicana City Council, I hear from constituents on a regular basis who are frustrated with paying more and more in property taxes each year and don’t fully understand who is responsible or where that money goes. It’s crucial for taxpayers to have clarity and transparency on the process and recognize how so many different entities play a part.
One common myth is that the State of Texas collects property taxes. Texas does not have a state property tax system but allows local governments the choice to collect them. Because of Texas law dating back to 1979, the property tax system is intentionally broken: it allows local governments to continuously shift blame for rising property taxes—the appraisal district points to cities, counties, and schools, for their rates and those same entities then point the finger right back at the appraisal district for their rising appraisals. This broken system was designed to give local governments cover to continue collecting higher property taxes while always having a way to shirk accountability to taxpayers. The buck must stop somewhere, and the fact is that tax rates set by schools, counties and cities are the ultimate reason your property taxes go up—I doubt you’ll hear this from any of your local elected officials.
Local government entities set a tax rate, which is then applied to your appraisal. School districts typically take the largest piece of your tax pie, often accounting for 40-50% or more of your tax bill (which is why school board races are so important). City, county and school taxes and bonds (a softer way of saying “increased tax burden”) have the most direct impact on your everyday life as well as your pocketbook, yet elections for these critical positions are largely skipped by the very people they impact. What most people don’t know is that every local taxing entity is free to set the property tax rate to $0.00—every local government could abolish property taxes, like the City of Stafford, TX has done.
Each year, the county tax assessor-collector must publish a tax rate that would collect the same dollar amount (not accounting for growth) as the previous year—called the “No New Revenue Rate” (formerly known as the “Effective Rate”). Every city councilman, county commissioner, and school board trustee knows prior to voting which rate will not increase your out of pocket tax bill. You will hear every year from schools, cities and counties— “we kept the rate the same as last year!” But the fact is simple—if the tax rate passed is higher than the No New Revenue Rate, your taxes were increased.
This is a prevalent talking point permeated throughout the local government network as a way to collect more money but convince voters that you didn’t raise taxes (this “trick” is taught to all newly elected city officials who attend the Texas Municipal League orientation—I witnessed it myself). If you are concerned over the continuous growth of your property tax bill and do not feel like you have seen the increased local services to justify the amount, it is your duty to vote in local elections for city and school positions (typically held in May). However, when it comes to your tax bill, the tax rate is only the first part of the equation.
The appraisal district assigns a value to your property that, in theory, should reflect about 95% of your property’s market value. The appraisal district must also notify the property owner if the value increases over a certain amount from the previous year. What many people don’t know is that value is not set in stone immediately; you have a right to protest the appraisal district’s assessment. Protesting your appraisal is a task most people forget about, but it can have a tremendous impact on if, or how much, your property tax bill increases. Business owners can protest their business personal property appraisal (commonly referred to as the “inventory tax”) as well. Every individual has a right to protest these appraisals, and there are professional services available to help guide you through the process if needed.
A great mentor of mine, the late Congressman Ron Wright, masterfully understood the property tax system and taught me a great deal about it. He summed up the issue neatly in an article for the Ft Worth Star-Telegram in 2016: “Appraisal districts, tax offices and local elected bodies should work together to provide as much honesty and transparency in the property tax system as possible. Blaming value alone for higher taxes should stop. Property owners should also do their part. Learn more about the taxes you have to pay and engage your elected officials.”
Taxpayers have two powerful, tangible tools at their disposal to keep property taxes in check, yet sadly many forget about them. The first is to participate in local elections for city council and school board elections. These are traditionally low turnout elections in May that have a greater impact on your daily life than Congress or the President. The second is to protest your appraisals, and exercise your right to check the appraisal district’s assessment. Actively participating in both sides of the conversation gives you and your community the best opportunity to bring property taxes under control, and ensure your dollars are wisely spent on the services you care most about. Until our state legislature and governor commit to abolishing the property tax system, no Texan will truly own property—we are all tenants sending a rent check to the government each year.
Chris Woolsey is a commercial real estate advisor and property tax consultant with The Means Companies.
He is currently serving his second term on Corsicana City Council. He can be reached for business inquiries at firstname.lastname@example.org, or city inquiries at email@example.com.