Analysis: Property tax relief that doesn’t lower your tax bill

AUSTIN, Texas - Three years ago, Texas lawmakers were trying to honor a promise to cut property taxes and raise the state’s share of the cost of public education.

They did it — and they didn’t. A new assessment of those 2019 changes — from the Texas Taxpayers and Research Association, a business trade group that concentrates on tax and fiscal policy — concludes that property tax increases will slow, but won’t stop.

It’s like having a headache that’s not as bad as the headache you’d have had without their intervention.

In the end, it’s still a headache.

Many property owners — homeowners, building owners, landowners, you name it — don’t care as much about their property value or their tax rate as they do about their property tax bill, which is the product of value and rates. And tax bills continue to rise in spite of the Legislature’s new restrictions.

Property values in the state, on average, are rising — in some places, at an astonishing pace. Because of the 2019 legislation, tax rates for schools and other government entities are falling.

But tax bills, which are based on those two numbers, continue to increase. That check you write every year is still getting larger every year.

It’s why exuberant officeholders can’t honestly say they cut our taxes.

Property value notices, that harbinger of future tax bills, are being delivered in a matter of weeks. News alert: The higher values are good news if you’re selling, bad news if you’re buying, probably bad news if you’re going to be paying next year’s tax bill.

TTARA says school tax rates have dropped 13% since the 2019 Legislature did its work on property taxes. But the other half of the equation — taxable values — rose 23% over that same period. (These are averages and won’t be the right numbers for any particular house or building or piece of land.)

"As property values rise, jurisdictions are finding they must cut tax rates or face voters," they write. "As a result, property tax rates are dropping like never before."

However, school tax bills over that period, the product of those two numbers, rose 8%. That’s an improvement from a system that might have dealt property owners 23% increases, but it’s still an increase.

An example: Someone in a $400,000 house paying $8,000 in property taxes would have seen an increase of $640 — instead of an increase of $1,840. Better, but still a bigger bill.

Politicians are still feeling pressure from unhappy property taxpayers. "It will take many years for Texas to become more tax competitive with other states absent additional infusions of state funds to bring our local taxes more in line," the TTARA report says.

They point to the state’s financial condition as a hopeful sign: Comptroller Glenn Hegar has said the Texas Legislature coming into office next year will have a budget surplus of $12 billion or more, and a balance in the state’s so-called Rainy Day Fund of about that same amount. "Lawmakers in 2023 should have more than sufficient funds to further buy down tax rates for Texas property owners," the report says.

Rising values are generally good for property owners; who doesn’t appreciate a good investment? But voters looking for property tax relief care a lot less about falling tax rates than about rising tax bills. The political problem is still baked into the system, even though lawmakers made some progress three years ago.

Overall, TTARA’s analysts write, property tax bills in 2021 totaled $73 billion — but would have totaled $79 billion without the 2019 changes in the law. "Texas property tax bills would have been $6 billion, or 8%, higher in 2021 had it not been for property tax reforms," write TTARA’s analysts.

Some relief, in other words, but still a headache.

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Disclosure: Texas Taxpayers and Research Association has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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