Friday, April 29, 2016, by Buddy Saunders
I hope you appreciate what I do for you guys! Wednesday I spent four hours (8AM to noon) listening to testimony at the Senate Select Committee on Property Tax Reform and Relief chaired by Senator Paul Bettencourt. These committee hearings are being held at various points throughout the state. The one here at UTA is, I think, the second and it ran all day.
What I learned and what I now share with you is fascinating. I would have liked to stay until the hearing ended around 6PM, but I am not retired. At age 69 I still have a business to run (85 employees), so I can devote only so much time to “civic duty.” Even those four hours out of office cost me. That evening I was up until 1AM on my computer, getting done what I ordinarily could have done during the day.
So in the time I could spare, here’s some of what I learned that should be of interest to anyone who pays property taxes.
We’ll start with what you already know. Property taxes are going up faster than your income if you are still working, and even faster in ratio to fixed incomes. Compared to typical earnings, property taxes are rising three times faster. For those on fixed incomes, property taxes are already pricing some homeowners out of their homes. You work like a dog for years and get your house paid off and you think you’ve got it made. You don’t. For many, rising property taxes represent a dollar amount higher than the original mortgage payment.
Those paying property taxes understandably don’t like this trend. And some of our elected representatives—primarily those genuinely conservative—have taken notice. There was even one Democrat on the panel, and he spoke impressively. Austin is looking to reform the system.
But before we go further on that, I want to dispose of a fiction being circulated by our own Arlington city council and other local officials all across Texas. The fiction is this, “We didn’t raise your taxes. Your property taxes went up because the value of your home went up.”
This isn’t just a fiction, it is a lie. And here’s why it is a lie.
Every county has a property appraisal district that each year determines property values, but the appraisal district does not set tax rates. If property values in a city go up, it is that city council that decides how much you are taxed. If they choose not to increase your taxes, they reset the city’s tax rate a bit lower so as to offset the increase in appraised value—and you end up with the same property tax bill as you had the year before.
The Arlington City Council Did Increase Our Property Taxes
But that’s not what the Arlington City Council chose to do. They wanted more of our money—nothing new there—so they left the tax rate unchanged, resulting in a bigger tax bill for you.
That they would do this is bad enough. That they would lie and blame the Tarrant County Appraisal District for the increase is shameful, but typical. Remember, these are the same folks who milked us for millions with their red light camera scam.
As we said earlier, Austin is listening. Two of our best senators, Konni Burton and Kelly Hancock, were at the hearing, as was Lt. Gov. Dan Patrick. Also on hand was Ron Wright, our Tarrant County Tax Assessor. These are all great people. We are lucky to be served by such men and women.
Write or call your representatives in Austin. Let them know you want property tax relief. Why do you need to do it? Had you seen who else was at the hearing on tax reform and relief you’d understand.
The audience consisted of about 500 people. That’s good you say, a good citizen turn out. The bad news is that at least half the audience was government officials (city, county, school district, hospital district, etc.) and their interest was tax increases, not tax relief. We saw three staff members from city hall in the audience and imagine there were likely more, including a council member or two.
We heard a few of them testify.
One said the tax increase in his county was actually a tax reduction. To get an honest answer, Senator Bettencourt had to put the man’s feet to the fire, stating among other things the obvious, “If on the exact same property, someone pays more in property taxes this year than last, then that is a property tax increase.”
A representative for the City of Dallas urged the panel to eliminate ALL property tax exemptions because too much property was not being taxed. Another believed that taxpayers were getting more than their money’s worth, and had no cause for complaint.
It should come as no surprise that government, no matter how it fattens, complains of an empty plate. You know that. But another thing you need to know is that cities all across Texas are members of an organization (without a single citizen-elected member) that has as its purpose lobbying state legislators for new opportunities to tax citizens at the city level. Each city pays citizen tax dollars to the Texas Municipal League (located where else but in the heart of Austin). The League in turn uses our tax dollars to hire $500,000-a-year lobbyists to lobby your Texas officials to pass legislation that provides local government further taxing opportunities. The sent out a letter to all the member cities telling them to hang tough in resisting property tax reform.
If you think the above is a good idea, and is fair, honest, and forthright, then you work for government.
Property taxes, if they continue to rise across the state as they currently are, will double for many of us over the next ten years. Will your income do the same?
Our reliably liberal Fort Worth Star-Telegram had a story on the Senate Select Committee on Property Tax Reform and Relief, but it overlooked, intentionally we think, the thrust of the hearing, which was a tremendous concern among citizens regarding ever-rising property tax bills. The Star-Telegram, ever a friend of bigger government, has other fish to fry.
The big elephant in the room the paper ignored was a developing plan to abolish the property tax altogether and have in its place a state sales tax based on consumption. Those that spend the most would pay the most. We don’t have time here to delve further into this idea, but it warrants consideration. One way or another, the property tax issue has to be addressed, or the day may not be far off before your home is sold on the courthouse steps, just as has already happened to some other home owners.
For now, we’ll leave you with a statement Tarrant County Tax Assessor Ron Wright made to the committee. Obviously, we need a lot more leaders like Mr. Wright.
I think everybody recognizes that the issues before this committee are enormous in their importance. Texans are tired of dealing with ever-rising property taxes with no end in sight. Believe me, I hear from taxpayers all the time.
It’s important to remember what got us to this point.
The system is designed so that the local elected body determines the taxes we pay, designed so that elected officials, not an un-elected appraisal district, make that determination. The ugly truth is that is exactly how it works. Local elected officials know the value before they set the tax rate. The amount of property taxes we pay has always been within their control. The problem is when the state created central appraisal, it also created a convenient scapegoat. Almost immediately, local governments began convincing people – conditioning tax payers to believe – that value, not tax rates, was the problem. Today, almost everybody believes that if their property value goes up, then their property taxes will automatically go up. Nothing could be further from the truth.
Local elected officials are good people who want to do the right things for their constituents, but many of them have also fallen victim to the myth. Many seem to believe that if they vote to keep the tax rate the same as the year before and values go up, then they haven’t really voted for a tax increase, but the truth is they have.
It’s time to drop the veil that has covered who really controls property taxes. The local governments control and have always controlled it. Elected bodies should not be allowed to hide behind their appraisal districts. This is particularly true of elected bodies who vote to keep their tax rate the same year after year while rising values produce a windfall of taxes that is rarely shared with tax payers in any meaningful way.
One proposal the committee will seriously consider is to create a system that requires that when values go up, tax rates automatically go down a commensurate level. Then, if the local body needs more revenue, they have to vote to increase the tax rate to pay for it. This would put the focus where it belongs and put accountability where it belongs: on the people’s elected representatives.
For too long local governments have conditioned the public to believe that higher values will raise taxes automatically. It is and has always been a myth. There is nothing automatic about tax increases. Local elected bodies have always had the power to lower their tax rates and slow the growth of government. Instead, too many too often chose to spend the windfall that came from higher values. It’s time to provide accountability that has been lacking for decades.
This committee will be looking at all facets of the property tax system. That’s good. You will be looking at the appraisal side and the tax collection side. That’s good. But ever rising property values is only one component of the problem, Mr. Chairman. The larger issue is tax rates.
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