June 19, 2006
Tax calculators

The Chron gives an overview of the new school tax along with a calculator to help you determine what your rate might be this year and next. Emphasis on "might", for this is how they disclaim it:

Remember that this only applies to school taxes. Taxes for counties, cities and other entities aren't affected by the new law.

It will figure your homestead exemption and show what your taxes would have been this year without the tax break, what they will be this year with the tax break, and what they should be next year when the break goes into full effect.

The calculator provides links to appraisal districts in Harris and adjacent counties, where you can find your home's assessed value if you don't know it.

The calculator won't determine bills for taxpayers with senior-citizen or disability exemptions. Their bills are frozen when they claim the exemption, and generally won't be affected by the new tax rates.

The Web calculator provides estimates, not guaranteed tax bills. There are four things that could change your bill:

  • The new tax law reduces only the portion of school property taxes devoted to school maintenance and operations. Most districts also have a smaller tax devoted to debt service. If your school district changes its debt structure or floats new bonds, that rate could change.
  • The new law reduces your maintenance and operations taxes by 11.3 percent on your next tax bill, and by one-third on the one that comes the following year. For many typical districts, that means a tax of $1.50 per $100 assessed value will be reduced to $1.

    But the law also allows school boards to raise the tax rate back up by 4 cents without asking voter permission. We've included the 4 cents, because the law effectively encourages districts to raise it.

    That's because revenue from the 4 cents won't be subject to the "Robin Hood" rule that requires property-rich districts to share some of their revenue with property-poor ones. In turn, property-poor districts will receive state matching funds for revenue from the additional 4 cents, said Harrison Keller, director of research for House Speaker Tom Craddick.

  • A small number of districts with booming real estate markets might have to reduce their property tax by a few cents because of a "rollback" provision that even the law's authors have a hard time explaining. Essentially districts can't collect too much more money next year than this year, but it is a generous and complicated formula.
  • The biggest variable is "appraisal creep," in which the taxable value of your homestead rises along with the market value of homes in your neighborhood. Assuming you're not protesting your appraisal, this year's figure is already set, but a rising value could affect the calculation for next year.

If you think your appraisal is going up, the calculator can still help. Enter your current appraisal, hit "calculate" and write down the figures shown. Then guess how much your appraisal might go up. Multiply your appraised value by 1.01 for 1 percent, 1.05 for 5 percent and 1.10 for 10 percent. Then enter the new figure and click "calculate" again, looking only at the new "next year" figure.

I'd argue that there's a fifth factor in play as well, which is how the Lege ultimately reacts to the need to feed the tax-cut beast. Governor Perry's budget cut mandate to state agencies only goes so far to cover the big honking shortfall that HB3 saddled us with. There's only so much more that can be cut back, so we're back to the old familiar argument: Roll this cut back, or find something new to tax. How much savings will you net if the sales tax gets hiked? Past history suggests the answer for most people is "very little, if at all". Of course, what effect there may be here is very much an unknown. I just think it needs to be a part of the conversation, because it's definitely out there.

On the other hand, the call for appraisal caps is being sounded again. By all rights, were it not for the sheer incompetence of State Rep. Dwayne Bohac, this would have passed in 2005. It's probably got as good a chance in 2007, assuming they find a sponsor who can walk and chew gum at the same time. I have serious problems with putting yet another constriction on tax revenues, especially when it's the state dictating to localities, but I'll be surprised if this doesn't happen in the next session.

Finally, I note in passing that Comptroller Strayhorn put out her own tax calculator last week, this one for the new business tax. Naturally, Governor Perry attacked it as being biased, but then he'd say the same thing if she hung a thermometer outside her office and reported the temperature on an hourly basis. Make of it what you will.

Posted by Charles Kuffner on June 19, 2006 to Budget ballyhoo | TrackBack

This is just a big freaking mess. The lege created a new fat tax on a whole bunches of small businesses and the headaches that go along with figuring that stuff out.

And then reduced property taxes in dinky amounts that most people won't notice.

It's the property appraisal cap that has the biggest effect on things. It's relentless.

The only good thing about the lege is that they meet every other year instead of every year. It would be better if they met less frequently so they could do less damage.

Posted by: Steph on June 19, 2006 2:09 PM