PROPERTY TAX REFORM AND TAX FAIRNESS

Recently, one of my former students said he felt he was “only renting” his home from the government, even though the place had been bought and paid for as far as the lending institutions are concerned. Like many Texans, he has lost the sense of ownership in his home despite the so-called “tax relief” recently announced out of Austin. Property taxes have made this homeowner feel like he is renting from the “landlord” of government.

Although the legislature boasts of giving the average property owner a tax savings of $2,000 over the next three years, here in District 59, county appraisal districts, pressed by the State Controller, have hiked property valuations to the point of reducing or eliminating the tax savings. Taxpayers in some communities in the district are actually seeing their property taxes go up.

Talking to the chief appraisers in each of the six counties in the district, I learned that the average property value in the district is around $72,000. The chief appraisers told me that the average increase in evaluations was 3 percent. When the math is done, the average property owner in the district can expect, at best, a $74 tax reduction this year and the next two years. According to news reports, the average resident of Stephenville will see a $17 tax increase.

We read about a drop in the real estate market, yet the “market value” of land is rising dramatically as far as the tax collector is concerned. In Coryell County, TXDOT decided to widen State Highway 107 and, through eminent domain, bought land on the right-of-way for $5,000 an acre. Wal-Mart wanted a specific location for their building in Gatesville and paid a large price to acquire that land. Chili’s did the same thing in Stephenville. These “deep pocket” purchases artificially drive up property values beyond what ordinary home buyers and sellers can afford and beyond what is fair for hard-working taxpayers.

Property taxes have changed the composition of several Texas communities and are threatening others. Not many of the original families from three decades ago still own and operate land down around Fredericksburg. That area became the “in” place to live, and demand drove up land prices. Because of increased valuations, many of the landowners who wanted to stay on their homesteads were forced to sell because they could no longer afford to pay the taxes. Other communities face the same threat.

The way to protect working families from the increases in property tax is to increase the homestead exemption to $45,000. Had the legislature not voted down such a proposal during the last special session, the average homeowner in the district would have experienced a real tax reduction of more than $300. That is only fair.

State government offers the illusion of tax relief while forcing additional tax burden onto the local governments in the form of unfunded mandates. When a state law creates a costly obligation on local taxpayers, the state lawmakers should provide the funds needed to meet the expense they created. Every unfunded mandate is a hidden tax increase for working families. That is unfair.

Another aspect of the lack of tax fairness was the failure of the Texas Legislature in the last special session to extend the property tax rate reduction to senior citizens and the disabled whose tax rates are frozen. These two groups were totally ignored by the elected officials. This oversight must be corrected.

The tax freeze only applies to the property taxes levied by schools. Senior citizens are still subject to tax rate increases by other governmental units. Seniors once worried about whether to buy food or medicine. Now they must also worry about keeping a roof over their heads. An elderly resident of District 59 wrote me that, due to the increases in taxes, insurance premiums, and utilities, she was going to be forced to sell her home and “move to the poor house.” The freeze on the tax rate for senior citizens and the disabled must apply to all taxing authorities.

The improper use of tax revenue must be considered with the question of tax fairness. As many as eighteen state parks are threatened with closure, and the services in the other parks are being restricted because money specifically designated for parks has been used for other purposes. Texas could have the finest state park system in the nation, if the money that was supposed to have been spent on the parks had been. The PACs and wealthy donors who have purchased the votes of our elected officials obviously do not visit state parks so the closures will not impact them, but the average Texans will suffer a real loss. That is also unfair.