It is a bill that says, if you as a city or county bring in > 2.5% more revenue than you did last year via property tax, that amount has to be ratified by the voters in a special November election. It is being billed as \u2018property tax relief\u2019. Schools, hospitals, and college districts are exempt and will presumably be covered under other legislation. It is being called the \u2018Texas Taxpayer Transparency Act of 2019\u2019.<\/p>\n
The proposed bill doesn\u2019t permanently reduce your property taxes or change your appraised value. It only sets up a method for the taxpayers to approve your tax increase. And even if increased rates fail to pass this year, there\u2019s nothing to stop them from passing in their entirety next year, effectively wiping out the relief.<\/p>\n
HB2 simply gives 50.0001% of the voters the right to raise your property tax the full amount. Every. Single. Year. That isn\u2019t relief. That’s kicking the can down the road at your expense.<\/p>\n
There will also be a great deal of ballot confusion as to what is an \u2018effective\u2019 tax increase and what is a formal tax rate change. Because our ballot language is strictly controlled by the state, we can\u2019t explain the differences on the ballot. We have to rely on outside educational materials that most people do not read.<\/p>\n
Legislators still haven’t figured out how we are supposed to have time to finalize a budget, discuss it with the public, amend it, propose a tax rate for the coming year, and all in 14 days, during the summer months when political participation is usually at a low.<\/p>\n
2019 Sample Calendar Under HB2 rules<\/strong><\/p>\n 4\/15 : Very rough estimate of appraisal value sent to city While we\u2019ve waited until September in past years because it gives us two full months to digest the 500+ page budget, under this plan budget consideration will happen while the public is largely absent due to summer vacations or the first week or two of school. And if the public IS there, they will have 2 public hearings at best to weigh in; one the night after we receive the budget on another the night we\u2019re expected to pass it. Of course we\u2019ll adjust and add in special meetings at the mid-point, but I expect this timeline to severely limit public input and involvement.<\/p>\n If this goes forward in its current form as it appears like it might, it’s my intent to ask council to schedule and pay for a tax ratification election every year no matter what the effective tax rate increase is, even if it is less than 2.5%. Yes, the election proposed in HB2 is another unfunded state mandate that our city will have to absorb, but I don’t see another path right now without steamrolling through the budget process because we just don\u2019t have time to do it any other way. This will remove some of the time pressure from the calendar, as we can make an adjustment to the rate on the ballot even after the election call.<\/p>\n Every law that \u201csounds like a good idea\u201d, or begins with \u201cthe cities should be made to\u201d means that your tax dollars will be spent.<\/p>\n Our cost of complying with every \u201cgreat idea\u201d from Austin and Washington is astronomical. I would go so far as to say that employee salaries and compliance costs compete for the top expense line item. When it comes to waste water or landfill operations, I\u2019d say that compliance costs easily outweigh salaries.<\/p>\n The state legislature has spent the last two years vilifying local governments for taxes but has yet to acknowledge any responsibility for their part in our cost of governance. They have in fact used this an excuse to exercise even more control over cities while still pushing more and more regulation out to them.<\/p>\n This deflection is disappointing, but not unexpected.<\/p>\n The same leadership that is attacking cities is sponsoring missions to neighboring states to bring large businesses to north Texas. Since we already have a housing shortage, they are introducing new demand in an area with short supply. That drives up prices. Higher prices drive up appraisals. Higher appraisals drive up taxes. It\u2019s economics 101, and it\u2019s a lesson that our state leaders are ignoring.<\/p>\n As a city I believe that we have to work to quantify our cost of compliance so that we can show the state the amount of financial pressure that they place us under. Until we can do that, I don\u2019t know if any meaningful conversation can take place. I would encourage those representatives that preach about cutting regulations to do that for the public sector as well. Over-regulation in the public sector leads to higher taxes, just as it increases prices in the private sector.<\/p>\n <\/p>\n <\/strong><\/p>\n Established back in 1997, the Homestead Appraisal Cap reduces the taxable value of your home. Basically, if you have a homestead exemption on your house (most of us do), it doesn\u2019t matter how much your property value goes up. The appraisal district can only raise the taxable value 10%. My home values looked like this over the past few years:<\/p>\n Home Value<\/p>\n In 2018 my appraised value was $232,000 but the taxable value was $214,522.<\/p>\n A homestead exemption gives you 8% off of the taxable value of your home. If my home was worth $100k, and the tax rate was $.7046 per $100 of home value, then the city would collect:<\/p>\n Formula: (Home value * (1 \u2013 homestead %) * 0.007046) = Tax Collected<\/p>\n $100k home with homestead: 100000 * (1 \u2013 0.08) * 0.007046 = 100000 * .92 * 0.007046 = $648.23 \/ year Based on how our economy has performed since 2014, I\u2019ve built a scenario below.<\/p>\n Years 1 \u2013 5 : 50% growth in value Taxes are calculated with an 8% homestead exemption<\/p>\n With a shift from 10% to 5% on appraisal value caps, property tax payers would achieve savings across all taxing entities at the same time. Adding in a ratification election for any formal tax rate increases would ensure that municipalities still must come to the voters.<\/p>\n This model is clear and steady even through recessions. Revenue, appraisals, and payments would remain predictable. They still grow slowly and adjust to the market and natural inflation. They continue to encourage home ownership, and they don\u2019t further financially reward out of state land and housing speculation that is partly to blame for our high valuations.<\/p>\n Tax rate ratification elections are only required when the formal tax rate changes, which eliminates ballot confusion on effective -vs- formal rates.<\/p>\n Credit worthiness increases for local governments as risk is reduced. It applies steady pressure on cities to spend less and increase fees on amenities that are not a part of core governance.<\/p>\n I hope our state reps will be able to fix what is in my opinion a fairly poorly-constructed bill. Other alternatives do exist like the one above, but our representatives need to be willing to examine them. So far they have made it clear that they are not interested in discussing anything outside of the narrow scope laid out at the beginning of the session.<\/p>\n If the problem is that property values are rising too rapidly, then dampen that rise with a single easy change, and stop trying to change the structure and timing of everyone’s fiscal years, elections, budgets, etc. Every extra little carve-out, provision, and exception is just making this mess even worse. The floor vote for HB2 is tomorrow, April 11th. Please read up on the bill<\/a>, decide how you feel about it, and let your state legislator\u2019s office know your opinion before then.<\/p>\n And above all, let your know legislator know that we have enough people here already. They can stop recruiting outside the state at any time.<\/p>\n Update 4\/11\/19 – The bill was pulled from the floor for additional work. There’s still time to engage your state rep and make a difference.<\/p>\n","protected":false},"excerpt":{"rendered":"
\n5\/14 : New council sworn-in
\n6\/18 : Last new members of council sworn in (if there were a run-off)
\n7\/24 : Property owner value protests completed
\n7\/25 : County delivers certified appraisal value to the city
\n7\/26-8\/4 : Staff begins adjusting and finalizing budget based on certified values
\n8\/5 : Staff-finalized budget(s) presented to council and public
\n8\/6 : Public Hearing
\n8\/20 : 78 days until election – Election Call Deadline, Pass a tax rate, Approve a Budget<\/font>
\n9\/1 : 66 days until ratification election
\n10\/1 : 36 days until ratification election
\n11\/5 : Election Day<\/p>\nReducing Spending and Mandates<\/h3>\n
Ok Robert, that\u2019s all fine and well, but my taxes are still too high. What\u2019s YOUR plan?<\/h3>\n
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\n Year<\/td>\n Improvement<\/td>\n Land<\/td>\n Total Market<\/td>\n Homestead Capped<\/td>\n<\/tr>\n \n 2018<\/td>\n $ 177,300<\/td>\n $ 55,000<\/td>\n $232,300 <\/td>\n $ 214,522<\/td>\n<\/tr>\n \n 2017<\/td>\n $ 165,020<\/td>\n $ 30,000<\/td>\n $195,020 <\/td>\n N\/A<\/td>\n<\/tr>\n \n 2016<\/td>\n $ 165,020<\/td>\n $ 30,000<\/td>\n $195,020 <\/td>\n $ 177,518<\/td>\n<\/tr>\n \n 2015<\/td>\n $ 131,380<\/td>\n $ 30,000<\/td>\n $161,380 <\/td>\n N\/A<\/td>\n<\/tr>\n \n 2014<\/td>\n $ 121,040<\/td>\n $ 30,000<\/td>\n $151,040 <\/td>\n N\/A<\/td>\n<\/tr>\n \n 2013<\/td>\n $ 121,040<\/td>\n $ 30,000<\/td>\n $151,040 <\/td>\n N\/A<\/td>\n<\/tr>\n<\/table>\n The Numbers<\/h3>\n
\n$100k home without homestead: 100000 * 0.007046 = $704.60 \/ year<\/p>\n
\nYear 6 : Level off
\nYears 7 \u2013 8 : Market correction \/ recession<\/p>\n\n
\n Year<\/td>\n Home Value<\/td>\n No cap (pre-1997)<\/td>\n With a 10% cap (current)<\/td>\n 10% Cap Home Value<\/td>\n With a 5% cap (new)<\/td>\n 5% Cap Home Value<\/td>\n<\/tr>\n \n 1 <\/td>\n $100,000 <\/td>\n $648 <\/td>\n $648 <\/td>\n $100,000 <\/td>\n $648 <\/td>\n $100,000<\/td>\n<\/tr>\n \n 2 <\/td>\n $110,000 <\/td>\n $713 <\/td>\n $713 <\/td>\n $110,000 <\/td>\n $680 <\/td>\n $105,000<\/td>\n<\/tr>\n \n 3 <\/td>\n $125,000 <\/td>\n $810 <\/td>\n $784 <\/td>\n $121,000 <\/td>\n $715 <\/td>\n $110,250<\/td>\n<\/tr>\n \n 4 <\/td>\n $140,000 <\/td>\n $908 <\/td>\n $863 <\/td>\n $133,100 <\/td>\n $750 <\/td>\n $115,763<\/td>\n<\/tr>\n \n 5 <\/td>\n $150,000 <\/td>\n $972 <\/td>\n $949 <\/td>\n $146,410 <\/td>\n $788 <\/td>\n $121,551<\/td>\n<\/tr>\n \n 6 <\/td>\n $150,000 <\/td>\n $972 <\/td>\n $972 <\/td>\n $150,000 <\/td>\n $827 <\/td>\n $127,628<\/td>\n<\/tr>\n \n 7 <\/td>\n $144,000 <\/td>\n $933 <\/td>\n $933 <\/td>\n $144,000 <\/td>\n $868 <\/td>\n $134,010<\/td>\n<\/tr>\n \n 8 <\/td>\n $135,000 <\/td>\n $875 <\/td>\n $875 <\/td>\n $135,000 <\/td>\n $875 <\/td>\n $135,000<\/td>\n<\/tr>\n \n Total Taxes Paid:<\/b> <\/td>\n $6,831<\/b> <\/td>\n $6,737<\/b> <\/td>\n <\/td>\n $6,151<\/b><\/td>\n<\/td>\n <\/tr>\n<\/table>\n How is this helpful, and how is it different from what is being proposed?<\/h3>\n
Now What?<\/h2>\n