Taxing Jurisdictions Feign Restraint in Wake of Legislative Scrutiny
Even with Gov. Abbott calling a special session for Congress to put in some overtime, the 85th Legislative Session ended with no major property tax reform. Several pieces of legislation, most notably Senate Bill 2, were introduced and passed either the House or Senate, but nothing of substance was able to make it the distance.
At issue with many property owners is that taxing jurisdictions, and the politicians that oversee them, can claim to have not raised taxes; meanwhile, if you ask one of the thousands of CRE owners in the state of Texas whether their taxes have gone up, they can provide bills from the past half-decade that show double-digit increases every year.
Taxing entities know taxpayers are catching on. Owners realize that appraisal districts are trying to assess at true market value, and their steep bill is because as the property appreciates in value the tax rate doesn’t come down to offset it. And while the market might determine their taxable value, it’s the jurisdictions themselves that set the rate. Jurisdictions also know if they don’t self-regulate, the legislature will step in and do it for them.
In a Dallas Morning News article, City Council member Lee Kleinman said “We just spent a horrendous legislative session beating back a change to the rollback rate… and one of our arguments was we can manage our own money. It would behoove us to do something on the tax rate.” As a result, many taxing jurisdictions across the state have taken action:
| Taxing Entity | 2016 Rate | 2017 Rate | % ∆ |
|---|---|---|---|
| Harris County | 0.41656 | 0.41801 | 0.3% |
| City of Houston | 0.58642 | 0.58421 | -0.4% |
| Houston ISD | 1.20670 | 1.20670 | 0.0% |
| Harris Co. Hospital | 0.17179 | 0.17110 | -0.4% |
| TOTAL: | 2.38147 | 2.38002 | -0.1% |
| Dallas County | 0.2431 | 0.2431 | 0.0% |
| City of Dallas | 0.7825 | 0.7804 | -0.3% |
| Dallas ISD | 1.282085 | 1.282085 | 0.0% |
| Parkland Hospital | 0.2794 | 0.2794 | 0.0% |
| TOTAL: | 2.587085 | 2.584985 | -0.1% |
| Tarrant County | 0.254 | 0.244 | -3.9% |
| City of Fort Worth | 0.835 | 0.805 | -3.6% |
| Fort Worth ISD | 1.352 | 1.352 | 0.0% |
| Tarrant Co. Hospital | 0.227897 | 0.224429 | -1.5% |
| TOTAL: | 2.668897 | 2.625429 | -1.6% |
| Travis County | 0.3838 | 0.369 | -3.9% |
| City of Austin | 0.4418 | 0.4448 | 0.7% |
| Austin ISD | 1.192 | 1.192 | 0.0% |
| Travis Co. Healthcare | 0.110541 | 0.107385 | -2.9% |
| TOTAL: | 2.128141 | 2.113185 | -0.7% |
| Bexar County | 0.29325 | 0.291229 | -0.7% |
| City of San Antonio | 0.55827 | 0.55827 | 0.0% |
| San Antonio ISD | 1.5126 | 1.5326 | 1.3% |
| University Health System | 0.276235 | 0.276235 | 0.0% |
| TOTAL: | 2.640355 | 2.658334 | 0.7% |
Obviously, such cuts are largely superficial when applied to taxable values growing at historical rates higher year after year, but at least it’s not exacerbating the problem. With the 86th Legislative Session not scheduled to begin until early 2019, CRE owners are left with little to hope for beyond self-imposed downward pressure on tax rates gaining momentum.