As legislators try to curb property tax bills, here’s what Fort Worth lawmakers propose
Owning a home in Fort Worth keeps getting costlier.
That’s a reality that David O’Brien, executive director at Housing Opportunities of Fort Worth Inc., knows all too well. The organization provides counseling and education for low- to moderate-income residents who want to buy a home.
He’s seen firsthand how homeownership has become increasingly unattainable in Fort Worth.
“Owning a home gives you some equity you don’t have if you rent, but it comes with a whole wagon load of issues like property taxes, homeowners insurance, and just the cost of real estate,” O’Brien said. “People are very frustrated.”
Politicians have proposed a range of solutions to increasing housing costs. Property tax relief will take center stage during the upcoming legislative session. The decisions lawmakers make likely will have a small impact on your property tax bill.
The rapidly increasing cost of housing cannot be solely attributed to property taxes, O’Brien said. The increasing costs of materials, along with rising demand for housing means that entry-level homes cost more.
Now, the average price of a home in Fort Worth is $355,000, according to the Greater Fort Worth Association of Realtors.
“That’s just a killer,” O’Brien said.
Yet, it’s easier to purchase a home in Fort Worth compared with most other large cities across Texas, said Cullum Clark, director of the Bush Institute-SMU Economic Growth Initiative.
“Fort Worth and Tarrant County are just significantly more affordable than Dallas or Dallas County,” Clark said.
The difference in affordability is attributable, in part, to Fort Worth’s land use policies that encourage developers to build homes in Fort Worth, Clark said.
Legislators attempted to tamp down property tax rates by passing a slew of tax reform legislation in 2019. Those changes impacted the way school districts levy property taxes on its residents.
The state also 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, said Dale Craymer, president of the nonprofit Texas Taxpayers and Research Association. Still, because the state does not levy an income tax, if legislators want to provide tax relief, property taxes are one of just a few options.
Budget surplus means opportunity for tax relief
Legislators will have a multibillion dollar budget surplus to spend, said Craymer. The numbers aren’t finalized yet, but the surplus could be as much as $30 billion, Craymer said.
A budget surplus is all the revenue that the state collected in between legislative sessions that they didn’t budget for.
“In a conservative state like Texas, first and foremost on most politicians’ minds is, ‘Well let’s return that to the people,’” Craymer said.
It is common to have a budget surplus, but $30 billion will likely be about three times larger than anything the Legislature has seen before, Craymer said.
Lt. Gov. Dan Patrick said he will prioritize property tax relief in the upcoming legislative session, according to the Texas Tribune. On the campaign trail, newly re-elected Gov. Greg Abbott echoed a similar plan for property tax relief, although the two leaders disagree on the possible scope of the tax cuts.
Patrick has pitched increasing the homestead exemption to $60,000 to provide tax relief, while Abbott is advocating to return half of the budget surplus to residents through tax relief. Abbott’s plan runs into trouble because of a constitutional spending cap that limits how much money the Legislature can spend.
The Legislature could buy down property tax bills by returning money to school districts, Craymer said.
Even if the Legislature spends $15 billion on property tax relief, residents likely won’t see their tax bill decrease next year, Craymer said.
“Part of the challenge is as real and as effective as the Legislature’s efforts to curb property taxes have been, the reality has never quite lived up,” Craymer said. “You can injure the beast, but you can’t kill it. It takes more than $15 billion to kill an $80 billion beast.”
Bills proposed by legislators
Several Tarrant County representatives have filed bills addressing property tax bills.
Rep. Giovanni Capriglione, R-Southlake, filed a bill that would restrict increases on the appraised value of residential property. The bill would decrease the amount appraisals can increase year-to-year to 5%. Now, the limit is 10%.
The bill amends the appraisal process by restricting appraisal offices, such as the Tarrant Appraisal District, to valuing a home by the lower of either the market value of the home for the most recent tax year or the sum of:
- 5% above the appraised value in the previous tax year
- The appraised value of property for the previous year
- The market value
The bill would also amend the tax code so that single-family residential residences that do not qualify for a homestead exemption would also get a 10% limit on an increase in the appraised value. Now, that limit is exclusive to residences that qualify for a homestead exemption.
A freshman lawmaker, Rep. Nate Schatzline R-Fort Worth, filed a companion bill with identical language.
It is common for politicians and taxpayers to pin rising tax bills on rising appraisals. A high appraisal makes tax bills higher and tax experts often encourage homeowners to dispute their appraisals. However, bills restricting how much appraised values can increase will likely have no measurable impact on a tax bill, according to Craymer, of the Texas Taxpayers and Research Association.
“Folks think that the Legislature has done something because their appraisal hasn’t gone up,” Craymer said. “But in reality, local jurisdictions just make up the difference by raising their tax rates. So our tax bills end up being the same. So I think appraisal relief is politically popular. It sounds great, but in reality, it accomplishes nothing.”
The Fort Worth Report reached out to Rep. Capriglione’s office for comment but did not hear back by the time of publication.
A bill filed by Rep. Craig Goldman, R-Fort Worth, broadens tax discounts for the elderly and disabled. Under the bill, every taxing unit besides the school district won’t be allowed to tax people over 65 and the disabled more than the taxing unit collected last year.
Previously, the over 65 and disabled exemption only applied to counties, municipalities and junior college districts. Rep. Charlie Geren, R-Fort Worth, filed a companion bill with the same language.
Another bill filed by Rep. Nicole Collier, R-Fort Worth, would require the chief appraiser in an appraisal district to disregard the value of substantially remodeled properties located in or around a tax increment financing reinvestment zone.
The exemption would apply to houses that are older than 30 years and located in the same tax increment financing reinvestment zone.
A tax increment financing reinvestment zone is a way for local governments to draw development to an area. It captures property taxes collected in the area and re-invests it in the same area.
Despite legislators making property tax relief a top priority, it can be difficult to impact residents’ property tax bills from Austin, Craymer said.
“The property tax is so big,” Craymer said. “It takes an awful lot of money to actually force tax bills down… The Legislature is accomplishing a great deal if they can just hold tax bills flat.”
In his homebuyer education classes, O’Brien, of the Fort Worth housing nonprofit, tells first-time homebuyers to expect their property taxes to continue increasing.
Most of the time, the rising cost of housing is out of homebuyers’ control. Typically, first-time homebuyers know little about property taxes. The best thing homeowners can do is be aware of the hidden costs buried in homeownership, O’Brien said.
“We think people are better off if they go into it with their eyes open,” O’Brien said.
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at email@example.com 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.
This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.