SENATE BILL 2 AND HOUSE BILL 2:
school districts might be, and an expected update to the state’s school finance formula has not yet been introduced. “We’re waiting anxiously for the language to come out,” said Darrin Rice, Conroe ISD’s chief financial officer. “When that comes out ... we’ll have a very good idea of where it’s kind of all going to shake out.” The state requires education costs be covered through a per-student funding formula, paid by a combina- tion of district taxes and state money. While CISD collects taxes at the high- est rate of all local entities, $1.28 per $100 in recent years, rising property values have increased the district’s share of funding obligations for its students. “Property taxes make up about [70] percent of our budget. Now if you look back just 10 or so years ago, property taxes were about 50 percent of our budget.” Rice said. FUTURE LEGISLATION By early March, SB 2 had passed through the Senate Property Tax Committee and HB 2 was left pending after a hearing in the House Ways and Means Committee. Per The Texas Tri- bune, the bills’ authors could still be open to adjusting the 2.5 percent rate, and lawmakers indicated the bills would not be ready for a final vote until education funding is addressed separately as well. Both Bettencourt and Toth said they hope to see a local revenue limit make it through the Legislature as a stepping stone for further action. Toth suggested tying appraisal values to a system like the Consumer Price Index and cutting unfunded mandates for schools and local governments to help curb problems, but maintained that spending responsibility and the proposed cap are the most important first steps to cutting taxes.
taxable values have driven up their costs of home ownership, and their total tax bill is now substantially higher than it was a decade ago,” Bunch said of his constituents. Shenandoah officials declined to comment on the effect property tax reform could have on the city, which has seen its tax rate drop from 0.2404 per $100 in value to 0.1799 per $100 in value from FY 2013-14 to FY 2017-18, while assess- ments have grown by 26.88 percent and tax revenue has increased by 12 percent in the same time period. Other entities with less dramatic rate changes have seen appraisals’ effect on taxes spike. Montgomery County tax rates dropped by around 3.5 percent from FY 2013-14 to FY 2017- 18, while the average home appraisal jumped more than 20 percent. In a February community meet- ing, Montgomery County Judge Mark Keough noted the effects of appraisals within his jurisdiction. “The fact of the matter is if you have a bill that doesn’t address appraisals, it’s not going to impact Montgomery County,” he said. Property valuations can grow con- siderably year to year, and are con- ducted by the county appraisal dis- trict and based on a combination of broad local classification data and individual property characteristics, according to the district’s website. Toth also called to restrain the appraisal district’s valuations and budget, noting that dramatic appraisal increases often do not match the market values of homes. “All told, $26 million per biennium is spent funding this appraisal dis- trict that doesn’t do anything,” Toth said. “It doesn’t provide any service that people benefit from; it just raises the value of your home.” The main pair of bills also do not spell out what financial effects on
The Texas Property Tax Reform and Relief Act
Over the past five years, property tax revenue in Montgomery County rose 15 percent. Senate Bill 2, filed by state Sen. Paul Bettencourt, R-Houston, and House Bill 2, filed by state Rep. Dustin Burrows, R-Lubbock, aim to curtail such growth by requiring voter approval for taxing entities to increase their property tax revenue more than 2.5 percent annually.
IF THE INCREASE PASSES
The taxing entity is allowed to collect more than 2.5 percent in additional property tax revenues.
To collect more than 2.5 percent in additional property tax revenue from the previous year, entities must hold a tax ratification election on a regular November election day.
The bills would lower the limit on annual property tax revenue increases by cities, counties and other entities
IF THE INCREASE FAILS
The taxing entity must adjust its tax rate to keep revenue growth at or below 2.5 percent.
without voter approval from 8 percent to 2.5 percent.
SOURCE:PAULBETTENCOURT/COMMUNITY IMPACTNEWSPAPER
Rising appraisal values can drive up tax bills even if the tax rate drops, as in the example below. HOWAPPRAISALS can affect your tax bill
“You’ve got to cap before you can cut. So if there is no spending cap, we’ll cut one thing, and it’ll beWhack- A-Mole,” he said. “The first thing you have to do pragmatically, you’ve got to cap what they can spend. And then from there, you can then attack what they take.” Since SB 2 and HB 2 were filed, law- makers from around the state have also moved on other pieces of prop- erty tax reform. Bills related to all sides of the issue, including adjusted rollback rates, the homestead exemp- tion, the appraisal system and school funding, are all up for deliberation this session. Bettencourt said he is confident some level of tax reform will be enacted this year. “I think the likelihood is extremely high by special session,” he said. “I am not going anywhere until we get it done.” ADDITIONAL REPORTING BY ANDREW CHRISTMAN AND ZAC EZZONE
EXAMPLE 1: HOME VALUE
$100,000
TAXRATE
x $1.25/$100
TAXBILL
= $1,250
EXAMPLE2: HOME VALUE
$150,000
TAXRATE
x $1/$100
TAXBILL
= $1,500
For more information, visit communityimpact.com .
281.974.0479
We are extremely thankful to all our clients for helping us rank among the Top 100 RE/MAX agents in TX for 2018! We couldn't have done it without you! Call us today for your best real estate experience!
RICARDO@THERGTEAM.COM | THERGTEAM.COM 26203 OAK RIDGE DR. THE WOODLANDS, TX 77380
55
The Woodlands edition • March 2019
Powered by FlippingBook