The commissioners court is responsible for setting about 17% of residents’ tax rate. The rest is paid to other taxing entities like cities, school districts and special taxing districts like water — with school districts making up the bulk of the tax rate.
“We talk about it as the property tax bill, but in reality, it is just the sum of the individual tax bills for all of the taxing units in which the property is located,” Dale Craymer, president of the Texas Taxpayers and Research Association, said. “In reality, it’s probably six to eight different bills combined. Each jurisdiction sets their own tax rate based on their budget needs and desires.”
The picture gets even more complicated when you consider the role that the Legislature and appraisal districts play in determining your final tax bill.
Under a hot real estate market, appraisals have increased precipitously which translates to residents’ tax bills.
The Texas comptroller audits appraisal districts every two years to ensure they’re offering fair estimates on the value of property. In Texas, there is no mandatory sell price disclosure, which critics say makes issuing accurate appraisals harder.
“I don’t think it’s hampering the appraisal district’s ability to set values, and I think that’s reinforced by the comptroller’s review of those values is generally determined that they’re accurate,” Craymer said.
The state is prohibited from levying a property tax on residents, but that doesn’t mean they have no power over what a resident’s tax bill will look like.
The state’s influence is most powerful when it comes to the school district’s property tax rate. The state has long been criticized for not paying its fair share to educate the state’s young people. The last legislative session made adjustments to the state’s tax policy for K-12 schools that the Texas Taxpayers and Research Association says has made a notable difference in what residents are paying for taxes.
“School tax rates for maintenance and operations are down by about 20%, Craymer said. Before House Bill 3 passed, those rates wouldn’t have gone down.”
Also, the state has established transparency measures to ensure that if a taxing entity, like a county, city or special district, raises the amount of money it will collect by 3.5% compared to last year, the voters have to approve of that increase.
The law has caveats. For example, if anytime in the previous three years a taxing entity adopted a tax rate less than 3.5% of last years’ rate, you can carry that difference forward, Craymer said.
The Legislature also creates exemptions to exclude some residents from paying their property taxes. These exemptions mean that residents still on the tax rolls are likely paying more for taxes.
Overall, Texas has some of the highest property tax bills in the country because the state does not levy an income tax on residents, which the state’s constitution bans.
“State and local tax systems are kind of commonly referred to as a three-legged stool of income, property and sales taxes,” Craymer said. “In Texas, we have a two legged stool of property and sales taxes… the policy decision that we’re not going to have this income tax means we’ve got to rely much more heavily on the taxes we are willing to levy.”
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at rachel.behrndt@fortworthreport.org or via Twitter. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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