MAY 24, 2022 — Editor’s note: This op-ed by Jon Taylor, professor of political science and chair of the Department of Political Science and Geography, originally appeared in the San Antonio Express-News.
Texas homeowners recently received a notice from their appraisal district that likely informed them that the appraised value of their property has risen. While those looking to sell their homes might be pleased to see it go up in value, those who aren’t selling their homes or are looking to buy a home in a white-hot housing market might be worried that increased property assessments will lead to a big jump in property taxes and mortgage payments. It’s a legitimate concern, given that property tax collections in Texas have risen by more than 20 percent since 2017.
For those nervous rising property taxes may eventually price them out of their homes, Texas provides property owners with a mechanism to protest the appraised value. May 16 was the deadline to appeal property appraisals.
Just because you received a higher appraisal this year doesn’t mean that it’s certain your property taxes will increase. Why? Because your assessed value is currently an estimation based on the appraisal district’s educated guess of the value of your home. It’s not set in stone, which is why you have the right to challenge your estimated appraised valuation.
Further, because Texas law limits how much of the newly assessed value of your property can be taxed, any property tax increase will depend in large part on what various local governments do later this summer when they finalize their budgets and set the tax rates for the revenue they need to operate. As a result, your property taxes may not go up.
Some local governments may have to cut their property tax rates to comply with laws passed in 2019 that grant property owners some measure of relief from rising property taxes by capping the amount that they can annually increase their property tax revenue. Unfortunately, these laws have only managed to slow the pace of increases.
Simply stated, the money to pay for essential public services has to come from somewhere. Since Texas has no state income tax or state property tax, local governments are heavily dependent on property taxes to fund public services. Like it or not, high property taxes are the trade-off that we make for not having a personal income tax.
As a result, Texas’ combined state and local sales taxes are well above the national average and property taxes are some of the highest in the U.S., which disproportionately hits middle-class and lower-income Texans.
With the Texas Legislature looking at about $12 billion in surplus when it meets next January, there will be tremendous pressure to reduce local government’s dependence on property taxes — particularly by school districts.
While there is a relatively broad consensus that something needs to be done about property taxes, I suggest caution and some level of fiscal restraint. Texas has other pressing, often deferred, budget priorities, from education to infrastructure to health care to law enforcement, that need to be addressed.
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