Taxpayers across Texas would see some local property tax relief if current attempts led by Lt. Gov. Dan Patrick and other Republican legislators to cap property tax revenues and appraisals comes to fruition, but those minor, temporary reliefs would come at a devastating cost to vital public services, local officials say.
Cities, counties, school and special districts rely on property tax revenues, growth of which typically correlates to that of wealthy areas, to fund new roads, sidewalks, and other infrastructure needs. Supporters of the caps argue that this system unfairly burdens property owners in well-to-do areas and allows local municipalities to reap the benefits without raising the rate for everyone.
Tax levies in the city have gone up 55% and tax levies in Bexar County have gone up 62% in total since 2005, whereas the local median household income has risen 22% in the same timeframe. That’s according to data used by supporters of local property tax relief.
Lt. Gov. Patrick’s appointed panel, the Senate Select Committee on Property Tax Reform & Relief, have used public meetings statewide to claim property taxes in Texas cities and counties, as a whole, have grown faster than the rise of the median household income since 2005. The committee will report their recommendations, which could include a revenue limit, before 2017 Legislative session begins.
But if, for instance, a 4% revenue cap had been in place over the last 10 years, the City would have lost a total $251 million in property tax revenue – enough to pay for 250 police officers, stated Ben Gorzell, the City’s chief financial officer, in a letter to the Senate committee sent in March. That hypothetical 4% revenue cap would result in average savings of $3.67 a month for local taxpayers, Gorzell stated.
“A lower revenue cap would unnecessarily restrict the City’s ability to responsibly manage its finances while providing critical services to our community,” Gorzell stated, noting San Antonio’s expected population growth of 1.1 million people by 2040.
Two bills filed in the Senate, during the 84th Legislature, would cap property tax revenue and appraisal values. SB 156 would automatically lower the property tax rate if a city or county’s revenue grow by more than 4% (the rollback rate) in one year, compared to the current 8%; and SB 182 would cap yearly appraisal increases for homes at 5%, compared to the current 10%.
More than 25 people attended a Monday night meeting at the Central Library to learn how local property taxes work. It was also an opportunity for local officials to educate people on what the tax reliefs would really mean for their personal wallets and for the public’s “wallet.”
“This is a serious legitimate concern,” Jeff Coyle, the City’s director of government and public affairs, told the Rivard Report before the meeting. “There have been bills proposing stricter revenue limits over the last 10 to 15 years. The difference this time is that Lt. Gov. Patrick has made this a priority.”
Property tax relief was one of his main talking-points and promises during his campaign for office last year.
Coyle said the City is worried the state is not taking into account the ebb and flow of city growth: There are years of little growth, sometimes a market downturn, intertwined with years of higher growth.
With a revenue cap, “there would be minimal tax relief with significant negative impact to our ability to provide services,” Coyle said. “And you’re not letting communities be able to provide services for their population.”
Councilman Roberto Treviño (D1) hosted the meeting Monday night with the Bexar County Appraisal District. Chief appraiser Michael Amezquita and deputy chief appraiser Mary Keiker were there to present information and answer questions. Trevino’s office provided flyers to attendees that noted the City of San Antonio’s property tax levy currently takes up 21% of average county resident’s tax bill.
The flyer also noted that San Antonio’s real estate market is undergoing unprecedented growth and value increases. This year in Bexar County, the average residential property tax appraisal is going up 7% and the average commercial property tax appraisal is increasing 17%.
Amezquita said real estate sales are the basis for appraised values, but noted that Bexar County’s population growth and demand for housing continues to outpace the overall local housing supply.
Trevino said he and other City leaders hope the Housing Commission to Protect and Preserve Dynamic and Diverse Neighborhoods will help to come up with a housing bond proposal to address the supply-and-demand issue.
Many residents recalled their own disputes over appraised values they believed were higher than the going market rate. The process to appeal a property tax appraisal has just begun and will last throughout the summer. Taxpayers have until May 31 to formally protest an appraisal.
Amezquita urged taxpayers who want to dispute an appraisal to come into the Appraisal District office this week for an easier walk-in visit. Scheduled appointments begin next week, and the BCAD office is expected to be very busy each business day from then on through the appeals season.
Only a couple of attendees at Monday’s tax meeting were concerned about the statewide property tax relief proposal. One asked if Treviño would pledge to lower the City’s tax rate.
The council member said it is too early to tell if the City has room to consider a tax cut, especially given the City’s growing list of needs, including a previously reported $1 billion-plus in sidewalk gaps alone.
City Council will meet Wednesday, during its regularly scheduled B Session meeting, to discuss the state’s search for local property tax relief and the possibility of capping revenue or reducing the current 8% rollback rate. But some officials in San Antonio and other Texas cities and counties are already expressing concern about what the Legislature may propose in the way of local tax relief next year.
“We have to take everything seriously. We certainly have to be vigilant about the state Legislature,” Treviño said following Monday’s meeting. “We’ll be working with our state representatives and state senators to let them know how we feel. It’s an ongoing process. We still have to figure out where we land on property taxes, what we as a City will receive. We’re working on what our legislative strategy will be.”
The City also says the Senate committee is using data that does not accurately compare growth rates among taxes, incomes and even the state’s economy.
According to Gorzell’s letter, the state comptroller’s office did not take into account how San Antonio freezes taxes for homesteads of individuals age 65 and over. He also wrote that the term tax levy does not distinguish between existing tax base values from new construction added to the rolls.
San Antonio’s is the second lowest property tax rate among major Texas cities and through the current fiscal year the City has not raised its tax rate in 23 years. The rate has decreased seven times during this timeframe.
The Texas Municipal League (TML), an advocacy group for Texas cities, uses the state’s data to say that since 2005, city property and state tax levies statewide have increased at similar rates. However, those city tax levies have increased less than total personal income in the state since 2005.
TML also says the gross state product has gone up more than total city property taxes in the same timeframe. Since 2009, state taxes have risen faster than local property taxes, personal income and the economy, TML added.
“For an accurate comparison, if the tax levy is adjusted for exemptions, tax freezes and new improvements for each year through tax year 2014, the net tax levy grew from $273 million to $331 million, or an increase of 21.2% over that 10-year period,” Gorzell wrote to the select committee. “In other words, the growth of property tax revenues is less than the median household income growth.”
Top image: Michael Amezquita, Bexar County Appraisal District’s chief appraiser, describes how local property taxes work at the Central Library on Monday, May 16, 2016. Photo by Edmond Ortiz.