Run-away TaxationBy: Ron C. West Our state government has taken some lessons from the skilled bureaucrats in Washington. They enacted laws that sound good on the surface but are far different in actual implementation and interpretation by the bureaucrats who administer them. This is particularly true of property taxes in the State of Texas. The fact is, your property taxes are going UP, UP, UP! The politicians do not believe that you are paying attention. They also know that your taxes (for the most part) are deducted from your escrow account so you do not have to write a check to the taxing authorities each month. Property taxes are now the primary taxing vehicle for cities, counties, school districts and some other special taxing authorities by locality. Our state legislature has written some interesting laws, beginning in 1997 through last year that will raise your taxes and impact you more every year in the future. Your taxes are now programmed to go up at a minimum rate of about 8.0% per year compounded annually. This means that your property taxes will double every 7 to 11 years, depending on where you live. This can also mean that people on fixed incomes are about to be taxed out of their homes. This is skillfully done by periodically raising the value of your property by the "independent" local tax appraisal district. To keep from alienating all of the voters every year, they carefully reanalyze only portions of the total areas of any taxing authority each year. You can rest assured that all areas are effectively reevaluated and reappraised every four or five years. This way only 20% to 25% of the voters are upset with the appraisal districts each year. To make up for skipping your property during the off years, the legislature has crafted a maximum 10% increase in value for each year your property was skipped. If they skip you for 3 years, they can raise your property value by 30% in one year. If they skip you for 5 years, they can raise your property value by 50%. (In other words, your appraisal is going up every year but may or may not be reflected on an annual basis.) If your property is classified commercial (whether used as such or not), there is no limit on the amount of the annual increase. Fortunately, when you reach age 65, you can file papers that "fix" your appraisal on your homestead, until your death. If you have rental property and are 65 are older, hang on, this all still applies to you. How are the appraisals done? By computer of course. The appraisal district determines a set of factors for an area, then with the computer, raises the values of all properties in the selected areas by the desired factors to get the required higher values. They don't really look at your property unless you complain or request a hearing. You should also know that they anticipate a certain percentage of complaints and requests for hearing. Just to make sure the properties are raised each year, the Tax Appraisal Districts have to answer to the state Board of Tax Professional Examiners (BTPE) that can identify them as "non-performing" if they don't raise the values enough each year. It has been reported that the chief appraiser in Johnson County recently lost his job for just this reason. Doesn't it make you feel good to know that our state is helping insure "reasonable increases" in your property value. As an aside, Mr. Oscar Trevino, a member of the NRH City Council who is also running for the position of mayor, recently told me in an email communication, that most of the voters who contacted him "wanted their property value to increase". Another member of the State Comptrollers Office said that the "property owners are increasing their own values by buying and selling their properties." According to our elected officials, the tax appraisal districts are the bad guys. According to the employees of the tax appraisal districts, they don't set the tax rates, the politicians do. According to the politicians, they are doing good jobs of holding the line on tax rates (ignoring the fact that the same old rates are raising millions and millions more in taxes each year.) Now to make themselves look good, the politicians in Austin want you to think that these property valuations are "revenue neutral". This is supposed to mean that there is no increase in tax revenue due specifically to increased valuations. To aid and abet this notion, they have published a document called "Truth in Taxation" which really proves the lies. This set of "guidelines" published by the State Comptrollers Office, shows taxing authorities how to manipulate their data to insure increasing taxes each year. They show how to calculate a "roll back rate" that incorporates a minimum 8% increase in gross revenues each year. If the taxing authority exceeds this roll back rate, then voters can petition for a roll back election to the roll back rate, which incorporated the big increase. Lost in the "truth" is the actual rate that would have yielded the same amount of tax for the current year, as received in the prior year, based on the new valuations. Nowhere is there any chance that we, as taxpayers, will not be impacted severely by the increasing valuations. In 2001, our Legislature, apparently influenced by lobbyists, passed Senate Bill 1444 which exempted Municipal Utility Districts (called MUD's) and Water Districts from any roll back considerations. They no longer have to live with the minimum 8% increases. Schools have also been exempted by other bills that allow them to manipulate their data to the point that they can, if required by their own expenditures, raise taxes 20%, 30% or even more in one year - without a roll back being possible. Only our cities, counties and a few other special taxing authorities have to put up with the 8% minimum annual increase. I wonder how long it will be before they also get special legislation to remove this roll back obstacle. The result of these facts is found in an analysis of collected tax revenues by any taxing authority over the past 5 years. In Northeast Tarrant County, collected property tax revenues have been going up by about 9% per year since 1997. This year, North Richland Hills passed an 11.4% increase while still keeping their rate per $100 valuation below the statutory roll back cap by 1/10000 of a cent. The bottom line of these facts is that the taxpayers are asleep. Lulled into thinking that there is nothing we can do. As long as our elected officials think we are sheep to be slaughtered for their benefit, these practices will continue. We must demand better information from our elected officials. Unfortunately, even our elected officials are often asleep at the wheel. Employees of each taxing district (i.e. the city manager & staff, the school superintendent & staff, etc.), draw the real budgets. These are presented to our elected (part time) representatives who simply rubber-stamp their efforts as long as it sounds good to them. There are tough choices in front of us. We need to know that nothing from government, at any level, is free. We need to learn to control governmental growth and the only way to do so is to control the funds they get. Our current property tax laws need to be changed beginning in Austin but challenged by each of us at every budget meeting of every taxing authority we pay taxes to.
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