2002 Is Shaping Up to be a Bad Tax Year

By Ron C. West - Texas Candidate for State Representative - District 91

The numbers are coming in from the Tarrant Appraisal District and the various taxing authorities and it does not look good for the home (owner) team! Based on TAD numbers, the "average" home went up 11.2% in value. While this seems to vary from community to community, it at least forms the basis for considering what is happening. If nothing else changed in our county, we would all (on average) be paying about 11% more in property taxes in 2003 than we did in 2002. Unfortunately - that is NOT the case.

To really understand what is happening, you need to understand some basic terms. Some of the taxing authorities are still under laws that require them to publish at least some information that indicates their development of your tax rate. The following term definitions may help:

• Effective Rate: This is a calculated tax rate per $100 valuation that would give the taxing authority the same amount of tax dollars for the next year, as compared to this year, based on the increasing appraised values of the properties within the taxable area of their jurisdiction. This rate will always be LOWER than the rate you paid this year. Even at the effective rate, the taxing authority would enjoy additional new tax revenue from the new construction in the area.
• Rate to Maintain: This is supposed to be essentially the same as "effective rate" but as applied to schools with differing calculations. Schools are allowed to project increases in maintenance and operations and in debt service before the calculation of this rate. It will typically be higher than the rate you paid this year. In most school districts there is already a planned schedule of increases in this rate for many years into the future.
• Maximum Rate Without Hearing: This rate, applicable to cities, is the effective rate plus a 3% INCREASE. This can be enacted without even holding a public hearing. This means that at LEAST a 3% rate increase will occur each year.
• Effective Operating Rate: This is one part of the "Effective Rate". It is the part that is to be used for maintenance and operations. It must be segregated because of a legislative cap of 8% without a potential for a Roll Back election. The M&O budget covers the day to day operations of the taxing authority and does not include any payments for principal or interest on debt service.
• Maximum Operating Rate: This is the Effective Operating Rate plus an 8% increase. This can be enacted with a public hearing but without any potential for approval or disapproval by voters.
• Debt Rate: By state law, taxing authorities must set taxes at an adequate rate to pay all principal in interest payments that will come due in the next year. This is done by adding up the principal and interest due and calculating the needed rate as a percentage of the taxable property under the taxing authority. It is important to understand that ANY debt issued by a taxing authority, in any form, automatically adds a corresponding increase in your property taxes. At the present time, a taxing authority can issue debt at any level which will automatically raise your property taxes in all future years. There is no way to issue Bonds or Certificates of Obligation without tax increases. (This is often disguised by "holding the rate" during a time of rapidly increasing property values.)
• Interest & Sinking Fund Rate: This is the same as the debt rate but as applied to school districts. Roll Back Rate: If you add the Maximum Operating Rate and the Debt Rate, the result will be the Roll Back Rate. It is limited to an 8% increase relating to maintenance and operations but unlimited for increases relating to debt. This can mean effective tax rate increases - without the possibility of a roll back election - as high as 20% or even more. If the Roll Back rate is exceeded by the taxing authority, the voters can seek a Roll Back Election.
• Roll Back Election: If 10% of the Registered Voters within the taxing authority sign a petition - within a very tight time frame - seeking a roll back election, the voters then have an opportunity to roll the tax rate back to the Roll Back Rate. Only the excess rate over the Roll Back Rate is subject to this election. Please note that schools and many "municipal utility districts" are exempt from any roll back exposure due to new legislation.

Now, if you understand all of the above, you only have to add a couple of figures to see where our problem is as property owners. Add an automatic 8%+ rate for cities to the 11% increase in valuations and you get about a 20% increase in taxes to be paid next year. The increase may be even higher than this when all of the actual rates are set.

Tarrant County College District, has already announced a 45% Tax Increase, GISD has announced a 14.35% increase, and virtually all other school districts will equal or exceed this increase. You also face increases from the County, the Hospital District, your local city government and perhaps other "muds" that can add up to a very significant dent in your budget.

If you consider that the College District has raised taxes by 266% since 1998, you can see the magnitude of the problem. They are averaging a 53%+ tax increase each year. They are subject to roll back elections, however, this would be virtually impossible to accomplish since it would require the signatures of 10% of all registered voters in Tarrant County within a 60 day time frame. This being the case, any of our taxing authorities can choose to follow this pattern of exorbitant tax increases.

What can be done? To even slow this process down, at some point the taxpayers have to voice concerns to the elected officials. Taxpayers have to attend the "tax hearings." The taxpayer must force the discussion of taxation by both of the major political parties. Until voters become concerned and until we elect people that are not addicted to taxation, I fear that we will see this pattern of tax and spend or spend and tax continue at an ever-increasing rate.

Remember the saying "I'm from the government and I am here to help you!" and "The government knows best for you!" But don't fall for all the poor mouthing about "revenue shortfalls" you are hearing. If you follow the money - it is all going into government pockets!

Disclaimer: Ron C. West is not an attorney. The above information is based on individual research and is his interpretation of the data he has analyzed. All numbers presented are published in the local newspaper or available on the Tarrant Appraisal District web site. He is a candidate for state representative, District 91. He may be reached at 817-831-2942 or by email at:ron@peg-soft.com.