How Property Tax Reform Works Out

LIBERTY, May 5, 2007 - Let’s take a look at property tax reform, praised by REP. Governor Rick Perry and REP. State Representative John Otto at it passage. It’s now being phased in and we can see the result, that it's even worse than was estimated during its debate and a terrible outcome for people living in Liberty County.

I live in a modest home in Liberty and just received my 2007 Notice of Appraised Value and Total Estimated Tax Statement from the Liberty County Central Appraisal District.

My home increased a modest $840.00 in appraised value this year and my school taxes were reduced by $45.43 this year compared to 2006. This is a monthly savings of less than $3.79 per month.

The thing to remember is that the larger and more expensive a home you have the greater your savings. But let’s face facts.  Million dollars homes don’t exist in Liberty County they exist in the large cities of Houston, Dallas and Austin. On a home appraised at a million dollars you would save approximately $3,300.00 annually in school taxes if the home were in Liberty County.

There are seven other taxing entities I pay property taxes to and due to changes in tax rates and the modest $840.00 appraised value increase my total property tax bill will increase $4.25 for the year.

In May of 2005 it was Speaker of the House Tom Craddick who appointed Rep. John Otto to serve on the conference committee for House Bill 3, the “Property Tax Relief Plan.” See related story

In August of 2006 I pointed out in an editorial that rural Texas would bare the burden of the proposed tax plan. See related story

This report based on information prepared by the Texas Tax Reform Commission appointed by th Governor indicated that a person would have to be making in excess of $43,400 annually to see any benefit from the plan and the more you make the greater your savings would be. These figures were calculated based not only on the insignificant reduction in school taxes but included the cost of raising existing taxes as well as new taxes called for in the legislation. The report was overly optimistic. In fact the bill increased total taxes on individuals making less than $43,400 per year. But in actuality the income must be much greater for a person to see any benefit from property tax reform. This was a tax increase on most Texans.

A person making $50,000 per year would save such a small amount on school taxes that the increase in other taxes and the additional taxes they will have to pay would be much greater than any savings on school taxes.

Property tax reform authored by the Republican State Legislature was little more than a tax break for rich constituents making large incomes and living in expensive homes in urban areas. They are the only ones who benefit. It is and will be a continuing disaster for rural counties like Liberty County where incomes are much lower and homes much more modest. Almost everyone in Liberty County will wind up paying more and there are more taxes to come.

One of the new taxes included in the legislation were changes in franchise taxes paid by businesses. The claim was that they were closing loopholes that allowed some companies to avoid paying franchise taxes. However, the legislation was so poorly thought out that they are currently reviewing whether or not the new franchise tax will bring in enough money to fund schools as expected. If it fails to accomplish the goals of the legislature then it to will be have to be changed again. These additional franchise taxes will by paid by businesses but will ultimately be funded by consumers. They start next year.

Senator Eliot Shapleigh of El Paso County published, “Texas on the Brink,” how Texas ranks among the 50 states, in February of 2005. It spells out the condition of our state and identifies the problems our legislators should be trying to solve in addition to property tax relief.

In it Senator Shapleigh states:

• Texas ranks 16th in property tax collected per person.
• We rank 32nd in average teacher salaries.
• We rank 50th in high school graduation rates, dead last.
• A recent ABC 13 report stated that 1 in 4 students in the Houston Independent School District will not graduate from high school.
• Texas students rank 48th in SAT scores.
• In addition we rank number 4 in the percentage of children living in poverty.
• We also rank 50th in the percentage of the population with health insurance.
• We have the 7th highest poverty rate among the 50 states.
• Texas ranks first in the percentage of homes financed with subprime-mortage loans.
• Additionally Texas ranks 32nd in the percentage of adults without Internet access.

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