Legislative Blog
J.B. Williams, J.D.
Property Tax Relief Act
A Blog about 88th Legislature Laws
A Bit of Background
The following backgrounds help summarize the author's views on both the general topic: Texas and more specifically 88th Legislature Laws as it relates to that topic.
Brief Summary of Texas
Texas is truly a Republic. There are a multitude of items that to modify the state constitution must be modified. So there are times when Constitutional amendments are on the voting ballots. While I sometimes abhor the wording, the concept that all of those legally able to vote in Texas must vote on the change is a good one. And bills in Texas are generally short, making it easier for everyone to understand.
Summary of 88th Legislature Laws
The blogs here will discuss the laws passed by Congress and signed into law, as well as those, passed by Congress and approved by the voters to become law. There are a multitude of laws and each time I post blogs I will notate here the current effective date if it is different from prior blogs. I am currently posting bills that took effect immediately - those bills total 336. I am currently posting regarding larger bills, so each blog covers a single bill.
Blog Summary
This bill modified rules on how school districts set their rates, and in all honesty, shifted any additional cost to the state. So it was more of a shift as to where the funding was coming from. Taxpayers still pay, they just pay on a statewide basis rather than at the school district level.
It also increased homestead exemptions, and capped increases on non-homestead property. The cap is only in effect through December 31, 2026, unless it is legislatively extended.
Property Tax Relief Act
Published: 2024-02-14
While I like the changes instituted here, these are merely minor shifts. It shifts school district support to more state support from district support. It will lead to changes in how cities/municipalities/counties set their tax rates. And remember, each school/municipality/county decides if they are implementing the homestead and other exemptions; and they decide by how much. This bill does limit their modification of that for awhile but it was previously decided and could be modified in the future.
That being said, I think a better solution would be to institute statewide sales tax as it exists and expand it to include services; and eliminate property taxes entirely. This would shift taxes to be more based upon spending. It would also make it less burdensome for homestead property owners to keep their properties, and create less bureaucracy. And if landlords are being fair, it should decrease rent because there would be one less significant value being used to compute the rent necessary for the property. It also makes things more transparent because renters pay property taxes indirectly but most probably don't think about that. Quite frankly from a landlords perspective, if they can raise rents enough to offset the increased valuation, then there is no reason for them to 'waste time' arguing that a property is overvalued. This may not be true if it is significantly overvalued but small overvaluations would be ignored. However that small amount could lead to higher rent, but renters are not free to argue a property is valued to high. They have rights to complain about maintenance and such but not to argue valuation.
This act begins with the maximum compressed tax rate for the 2023-2024 school year. It is a reduction of $.107. If a school district received an adjustment in the 2022-2023 school year, they may be entitled to additional state funding. Beginning in the 2023-2024 school year, a district may be entitled to additional state aid, if the amount of funding to service debt was reduced by the increase in residence homestead exemption. This only applies to debt incurred and owing, or authorized but not issued, as of September 1, 2023. The rates must be provided on the County Appraiser's website for the prior year and the current year.
Residence homestead exemption for school district taxation is increased from $40,000 to $100,000. A governing body for a school district, municipality, or county that has adopted the residence homestead exemption may not reduce the amount of or repeal it until after December 31, 2027.
Property other than Residential Homestead.
Several definitions are made.
- Consumer price index: average over a state fiscal year of the Consumer price index for all urban consumers, us city averages.
- Disaster recovery program: one funded with community development block grant money from the federal government.
- New improvement: an improvement to real property made after the most recent appraisal of the property. It does not include repairs to or ordinary maintenance.
This is called the circuit breaker limitation. The appraised value may be increased in an amount not to exceed the lesser of:
- the market value of the property for the most recent tax year; or
-
the sum of:
- 20% of the appraised value of the property for the preceding year; and
- the appraised value of the property for the preceding year; and
- market value of all new improvements to the property.
A structure that replaces one damaged and made uninhabitable is not considered an improvement if it is not a larger square footage and of similar building materials. It can exceed the square footage and have higher quality construction materials, and still not be an improvement, if it was done to meet requirements of a disaster recovery program. These caps apply only to property valued up to, and including, $5 million for the 2024 tax year. This amount will increase/decrease based upon the state fiscal year consumer price index in the preceding year. This section expires December 31, 2026. So any property being capped at the 20% limitation, will no longer benefit from the cap beginning January 1, 2027 unless the legislature extends the expiration date.
Appraisal districts in a county with a population of less than 75,000
The appraisal district is governed by a Board of Directors consisting of 5 individuals. Employees of a taxing unit are not eligible to serve.
Appraisal districts in county with a population of 75,000 or more.
Board is 9 directors. Five appointed by the taxing unit, three elected by majority vote in general election for state and county officers, and the county assessor serves as an ex officio director. To serve they must reside in the district currently and have resided there for at least 2 years immediately preceding. They cannot serve if they are on the governing board for the taxing unit, an employee of the taxing unit. They will serve staggered 4 year terms. To appear on the ballot they must have the lesser of:
- 500 signatures; or
-
2% of the total vote received in the county by all candidates for governor in the most recent gubernatorial general election, unless it is less than 50, then the lesser of:
- 50; or
- 20% of the total vote
The fee for being placed on the ballot is $400 for county with a population of 200,000 or more; or $200 for a county with a population of less than 200,000.
There are a multitude of sections dealing with requirements for mailing taxing statements out, vacancies on boards, and calculating total tax values. Many items expire in 2024 because they were merely in place for the event the increased homestead election passed.
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