Recent news articles about property taxes in Texas continue the refrain that property taxes are unpopular. The Dallas Morning News, on April 29, 2016, reported, “Texas near top of the list of states with highest property tax burdens.” On April 11, 2016, the Austin American Statesman reported, “Home values rise 9 percent in Travis County.” The San Antonio Express-News reported on May 4, 2016, “2016 Bexar County property value is up $13 billion over year before, real estate values up 7.5%.” Similarly, on May 25, 2016, the Dallas Morning News warned about “A taxing problem,” specifically discussing how “Dallas property taxes squeeze middle class” because homeowners in that demographic saw an increase in the value of their homes of over 11%. If there is to be a “fix” of the property tax system, it should focus on taxing units and spending and not on the setting of appraised values by appraisal districts.
In any other context, property owners would be delighted to learn that the value of their real estate has increased. Appreciating property values are a sign of a strong and thriving economy. They incentivize investment in communities. Moreover, they generate interest in real estate projects and can help facilitate financing. Ultimately, it means greater profits when it comes time to sell. Who wouldn’t want to see the value of their asset rise? In our current tax environment, however, owners fear higher property values because they have become synonymous with higher property taxes based on articles such as these.
Our property tax system need not lead to counterintuitive results. In fact, Texas has one of the best property tax appraisal systems in the country. We have appraisal districts and taxing units, each with their separate and independent roles. In 1979, the Legislature abolished the appraisal authority of taxing units, established a centralized appraisal district for every county with the exclusive responsibility to appraise property values, and empowered taxing units to set tax rates and to collect taxes. Both of these groups can affect the ultimate ad valorem tax liability of a property owner. But, unfairly, it has been appraisal districts that have almost exclusively taken the blame in the press for increased taxation. Indeed, at a recent Senate Select Committee on Property Tax hearing in Arlington, there were hundreds in the audience, but not one complaint about the Dallas Central Appraisal District or the work of Chief Appraiser Ken Nolan.
The Mayor of Fort Worth, Betsy Price, in her May 19, 2016 Fort Worth Star Telegram opinion piece, wrote, “What to do about high property tax assessments? Cut the tax rate.” The Dallas Morning News echoed this sentiment on May 25, 2016, when it explained, “The only way officials can reduce the burden on taxpayers is by lowering their tax rates.” Instead of vilifying appraisal districts and complaining about a “broken” property tax system, property owners should put pressure on school districts, cities, counties, and other taxing entities to exhibit greater accountability and transparency over tax rates.
Texas has one of the nation’s best property tax systems. To make it work, however, appraisal districts and taxing units alike must do their part in maintaining the system’s integrity and fairness. Property owners can enjoy increases in their property values without fear of being taxed out of their investment. Taxing units, thought, must step up and do their part.