Property Tax News Roundup

Voters approve constitutional amendments affecting property taxes 

• PROPOSITION 2: Allows the Legislature to provide for ad valorem taxation of a residence homestead solely on the basis of the property’s value as a residence, not at the potentially higher commercial use value.

Section 1, Article VIII, Texas Constitution, requires taxation to be equal and uniform and provides that all real and tangible personal property in the state, unless exempt as constitutionally required or permitted, is to be taxed in proportion to its value. The amendment authorizes the legislature, by general law, to provide for the taxation of a residence homestead solely on the basis of its value as a residence homestead, regardless of whether residential use by the owner is considered to be the highest and best use of the property.

• PROPOSITION 3: Provides for uniform standards and procedures for the appraisal of property for taxation. Texas lacks uniform standards, and proponents say this amendment would ensure that property in diverse parts of the state is valued using the same generally accepted practices.

Section 23(b), Article VIII, Texas Constitution, requires that administrative and judicial enforcement of uniform standards and procedures for the appraisal of property for property tax purposes, as prescribed by general law, originate in the county where the tax is imposed. An exception is that the legislature may provide by general law for political subdivisions with boundaries extending outside the county. The amendment would remove that requirement, as well as the exception. It would instead give the legislature full discretion to prescribe the manner of the enforcement of uniform appraisal standards and procedures.

• PROPOSITION 5: Permits the Texas Legislature to allow a single board of equalization for two or more adjoining appraisal entities. That means area appraisal boards can be consolidated if they choose.

Section 18(b), Article VIII, Texas Constitution, requires the legislature to provide by law for a single appraisal within each county of all property subject to property taxation by the various taxing units located in that county. That subsection permits the legislature to authorize appraisals outside a county when political subdivisions are situated in more than one county or when two or more counties elect to consolidate appraisal services. Section 18(c), Article VIII, requires the legislature to provide for a single board of equalization for each appraisal entity consisting of qualified residents of the territory appraised by the appraisal entity. The amendment would allow the legislature by general law to authorize a single board of equalization for two or more adjoining appraisal entities that elect to provide for consolidated equalizations.

A. Whereas, the Harris County Appraisal District (HCAD) is charged with the responsibility of setting the appraised values for the properties in Harris County; and,

B. Whereas, HCAD does not have to appraise but every three years, should deduct real estate sales commission from appraisals, and are not required by any law to increase home values by 10% a year, and,

C. Whereas, such appraised value serves as a false tax base for the City and the County and bears directly on the amount of property taxes to be paid by property owners; and,

D. Whereas, many citizens consider the appraised values of their properties to be over market value, unreasonable, excessive and not reflective of current real estate market conditions; and,

E. Whereas, state law provides citizens the right to protest the appraised value of their properties; and,

F. Whereas, many citizens in Harris County are actively exercising their right to protest the appraised values of their properties; and,

G. Whereas, HCAD spends approximately $6 million tax dollars each year in protest litigation, and

H. Whereas, the City of Houston and Harris County each contributes $10 million to HCAD every year, and,

I. Whereas, the Executive Committee of the Harris County Republican Party (HCRP) is in agreement that the appraised values of many of Harris County’s properties are excessive, over market value; and the methodology used to determine market value is flawed, and not reflective of current market conditions; therefore,

J. Be it resolved, that the HCRP is committed in its support of families and businesses, and in the general economic good health and well being of citizens adversely affected by unjustly appraised property values; and,

K. Be it further resolved, that the HCRP is committed in its support of Harris County citizens who actively protest the appraised over market values of their properties and their efforts to self educate themselves on the appraisal process; and,

L. Be it further resolved, that the HCRP encourages HCAD to change, re-calculate, and accurately determine and properly reflect property market values, permanently changing, for future generations, its methodology for computing property values in Harris County, and,

M. Be it further resolved, that the staff of the HCRP is directed to issue a press advisory to the media about this decision and to send letters to the following: Chief Appraiser Jim Robinson, Houston Mayor Bill White, the members of Houston City Council, Harris County Judge Ed Emmett, Harris County Commissioners Court, District Attorney Pat Lykos, State Representative John Otto, and State Comptroller Susan Combs, which shall include a copy of this resolution.

Submitted by Helena Brown, Precinct Chair 0577

Policy group calls for elimination of property taxes

The Texas Public Policy Foundation is calling upon the Texas legislature to eliminate property taxes and replace them with an expanded sales tax. In an excerpt from its policy paper, “Enchancing Texas Economic Growth through Tax Reform,” they put forth their basis for reform.

“Tax policy matters because Texas must compete with other states for tomorrow’s growth industries. Economists in general acknowledge that reduced tax rates and a competitive economic landscape improve economic incentives, thereby creating longrun benefits to a state. However, they tend to underestimate how quickly the economy responds to the economic incentives. Ignoring the incentive effects is perilous and leads to incorrect forecasts. While all taxes create a negative effect, property taxes are particularly onerous. Based on the generally accepted principles of sound taxation, property taxes are inferior to sales or consumption taxes. These theoretical deficiencies are borne out by the data. The heavy burden of property taxes has led to multiple ‘tax revolts’ throughout the history of the United States. Empirically, property taxes impose a larger burden on a state’s productive sector than a sales tax. Consequently, property taxes reduce overall economic performance more than necessary to raise the same amount of tax revenues compared to a sales tax. This larger cost created by property taxes compared to sales taxes creates a tax reform opportunity for Texas.

Regardless of the sales tax reform that is ultimately implemented, based on the theory of sound taxation and the empirical evidence Texas should replace its current property tax revenue system with an expanded sales tax. Such a reform creates many benefits for the state without changing the total tax revenues that the state and local governments currently raise. These benefits include:

• Enhanced economic growth;

• Stronger job growth;

• Increased population growth;

• A stronger competitive environment; and

• A revenue stream that is more closely aligned with

the citizen’s ability to pay.

The reality is that the economic growth that follows the implementation of pro-growth economic landscapes often exceeds the most optimistic projections due to the dynamic effects they generate. The longer a pro-growth economic landscape is in place, the greater these gains and the more prosperous a state’s economy becomes. During prosperous times, when economic growth is greater, there is the added benefit of falling demand for government social spending programs (e.g., unemployment, welfare, etc.) that further benefits a state’s budget.

The current economic crisis enhances the benefits Texas can gain from reforming its tax system. Difficult times expose the stresses inherent in current tax systems. They also amplify the benefits from pro-growth tax reforms. Consequently, the timing for a pro-growth tax reform in Texas could not be better. Texas has everything to gain from repealing its current property tax system. Such a reform will significantly enhance Texas’ already competitive landscape and ensure Texas’ relative economic prosperity will endure.”

The Texas Public Policy Foundation is a 501(c)3 non-profit, non-partisan research institute. The Foundation’s mission, according to its website www.TexasPolicy.com, is “to promote and defend liberty, personal responsibility, and free enterprise in Texas by educating and affecting policymakers and the Texas public policy debate with academically sound research and outreach. Funded by hundreds of individuals, foundations, and corporations, the Foundation does not accept government funds or contributions to influence the outcomes of its research.” Former Texas Secretary of State George W. Strake, Jr., is one of its board members.

Candidate for governor urges elimination of property taxes

Debra Medina, a resident of Wharton County, has declared her candidacy for the governorship of Texas. She will run against two high profile candidates in the Republican primary in March. She describes herself as a wife and mother, a registered nurse, a businesswoman, and a rancher. She also serves as Chairperson of the Wharton County Republican party.

One of the issues that distinguishes her from the other candidates is her stand on eliminating property taxes. From her website, MedinaforTexas.com:

“We must eliminate property tax in Texas. We can fund necessary government services more efficiently and fairly using a broader based sales tax. Eliminating property tax and deriving that revenue from a sales tax will mean a $3 billion increase in net personal income in Texas, and will add 125,000 -175,000 jobs. Taxes are the fuel that feeds big government. Taxes are the burden carried by productive citizens. To relieve that burden, taxes must be cut. Two cornerstones of the American Dream are purchasing a home and starting a business. So why are We Texans punished for pursuing this dream?

As Governor I will fight to end property taxes. This will allow Texans to truly own their piece of Texas. You cannot truly own property that you have to pay the government for every year. It’s time to remove barriers to opportunity. It’s time to start dreaming again in Texas.”

A new group has formed to promote property tax reform in Harris County. They have established a website to call attention to what they term abuses by the appraisal district, and to get input from the public. Their website is www.AppraisalDistrictAbuse.com.

(The Banner, November 9, 2009)