Some Texas lawmakers are prioritizing taxpayer relief this legislative session, which started in January, but some local government officials are worried about what it could mean for their budgets.
Sen. Paul Bettencourt, R-Houston, shoots the primary effort to reform the property tax system this session. Bettencourt filed Senate Bill 2, the Texas Property Tax Reform and Relief Act, on Nov. 29. It was given top priority by Lt. Gov. Dan Patrick. SB 2 tries to lower the property tax revenue cap for cities and counties from an 8 percent increase over the previous year to a 4 percent increase.
Texas Municipal League officials depict the proposed rollback rate reduction as an “assault on public safety, economic development and transportation” At the same time, officials with cities and counties across the state, including Harris County and Jersey Village, have shown their concerns about how SB 2 could confine future budgets.
Demanding reform
Paul Bettencourt, Chairman of Senate Select Committee on Property Tax Reform, hosted a series of town hall meeting across the state in 2016. Bettencourtsaid“In hearing after hearing, the committee heard the same message loud and clear: Texans are asking for and deserve property tax relief ”
According to the Harris County Appraisal District officials, the well-designed system in Harris County allocates the tax burned fairly among all owners of taxable property. HCAD appraisers determine the assessed value of a property using a formula referred to as mass appraisal. HCAD analyzes property sales in each zone using computer algorithms and performs a calculation to determine changes in value that apply to all properties in that zone.
In addition to SB 2, several other bills related to property tax relief have been filed by lawmakers this session. Rep. Cecil Bell, R-Magnolia, filed HB 167, which would limit appraisal increases to 5 percent of the appraised value of the property for the previous year. Rep. Dwayne Bohac, R-Houston, filed HB 1473, which would exempt homeowners age 80 and older from property taxes entirely if they have owned their homes for at least 10 years.
What if SB2 is passed?
Bettencourt stated that if SB2 is passed, it would pressure a taxing entity to lower its property tax rate to compensate for increases in assessed property values. As a result, the rise in the property tax rate each year would be limited.
Citizens must request to bring about a rollback election in which voters can decide to reject a proposed property tax rate. Under SB 2, the election would be triggered automatically whenever a 4 percent increase in property tax revenue from the previous year is reached.
The election would be held during the uniform election date in November of the applicable tax year. The ballot language must include the adopted tax rate the rate set for budgeting purposes as well as the difference between that rate and the rollback tax rate the rate that would need to be set to stay under the 4 percent revenue cap. The bill has an effect upon cities and counties, but not municipal utility districts, emergency service districts or school districts.
Patrick O’Connor, president and owner of Houston-based property tax consulting business O’Connor & Associates, stated that the legislation is the most significant taxpayer relief bill filed in the state in 20 years. O’Connor, whose business has workplaces in Austin and Dallas, also remarked that the bill would have the best impact in cities and counties with high growth.
“It would definitely save homeowners money in years where property values go [up] quickly,” O’Connor said. “And we’ve seen a number of years in Harris County where appraisals have risen by 10 percent.”
O’Connor quoted in a best-case scenario with a 10 percent increase in appraised value year over year on a $280,000 home and a total combined property tax rate of $2.70 per $100 valuation including all taxing entities the bill could save homeowners as much as $454 that year if residents were to vote down the tax increase.
In addition to reducing the rollback rate, SB 2 would also introduce a series of appraisal reforms, including the creation of oversight boards, raising small-business exemptions and standardizing the date for property owners to protest their appraisals.
Another approach to lower property tax:
The property tax revenue will be even more crucial to the county moving forward, acknowledged Jim Robinson, deputy director of special projects with the Harris County Budget Management Department. Robinson recognized the developing property taxation rate, however, there is little room to make cuts in these fields.
Despite, in light of the fact that Harris County has been conservative in its budgeting, SB 2 is not anticipated that would have as quite a bit of an impact on Harris County as it might for other cities and counties, Robinson said.
Robinson also said the county budget office have been in touch with Bettencourt’s group to convey concerns and come up with solutions.
Robinson additionally proposed having the state put more cash in public education as another means to lower property tax bills. School districts are basically subsidized through property tax revenue and state help, and he said an increase in state education financing would permit districts to diminish their tax rates.
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