The Governor's fuzzy math

Both the Chron and Express News political blogs note that Governor Perry is rolling out an ad campaign to tout property tax relief. In doing so, he's playing quite a bit fast and loose with the math. From the E-N blog Strange Bedfellows:

Higher home values will produce larger school property tax cuts, which may explain why the governor's campaign used home sales prices to come up with an average $2,000 tax savings that Gov. Rick Perry touts in new TV and radio spots.

Homes sales prices are much higher than what homes are assessed at for tax purposes.
Perry campaign spokesman Robert Black says Perry used homes sales prices compiled by the Texas A&M Real Estate Center as a way to determine "the average value of the home."

"If you want to know the best barometer of what homes are worth in the state, it's what they are selling for," Black says. "That's the best number we can come up with."

But home sales prices have little to do with property taxes - and the average San Antonian should not count on a $2,000 tax cut - not even over the next three years as the small print disclaimer says in the ad.

The average home sales price in San Antonio has ranged between $155,000 and $163,000 during the first three months of 2006, according to A&M's Real Estate Center.

But Bexar County's average home value is $117,300, according to the Bexar County Central Appraisal District.
The difference between home sales prices and their value for taxes "is precisely the reason why the governor has been calling for sales price disclosure," Black says.

Sales price disclosures would produce more accurate information for tax assessments.

That $117K figure is almost identical to the average assessed value for HISD as cited in the Chron post. Let's review what the Perry camp is up to:

1. They start with a figure - sales price - that is not the basis of how property taxes are assessed, meaning they're overestimating to begin with.

2. They do not take into account increases in assessed values, which even with tighter appraisal caps in place would reduce their figure further.

3. Property taxes and school taxes are two different beasts. The former may be going down, but the latter very likely isn't for most people. Those increases are not taken into effect.

4. They assume that the budget math will be in place to allow the full reduction to $1 per of $100 value in 2007, which is probable but by no means assured.

5. They overlook the other tax increases, which will hit smokers the hardest.

6. To top it all off, they round up from their already inflated calculation of $1936 to $2000.

Pretty darned impressive, if you ask me. Gotta give it up for the Governor - he's never been one to let such muddlesome details get in the way of his story.

Oh, and did you notice the irony in Perry's call for sales price disclosure? Given the gap between average actual sales price in Bexar County and average tax assessment, requiring the sales price on houses to be disclosed will almost certainly have the effect of causing the initial assessment after a sale to be higher than it would have been otherwise. If you think new home buyers should start out paying more property taxes than they currently do, that's exactly what you'd want.

Posted by Charles Kuffner on May 24, 2006 to Budget ballyhoo | TrackBack