City Passes Biggest Tax Cut in Decades (!!!) Mike Morris, HoustonChronicle.com ($$$)
(Selectively quoting here Chron, you allow other bloggers to rip whole articles after all)
The cut will save the average homeowner with a standard homestead exemption about $50 next year. That follows a $12 savings for the same home this year, after the revenue cap had taken effect for the first time. City data show the average Houstonian's taxes still are rising, however, as home appraisals continue to increase.Emphasis mine.
The problem with the reporting on this is as follows:
The "average" City of Houston taxpayer will NOT see a $50 tax savings from this cut since the increased value of their home will increase at a higher rate than the decrease in the tax rate. This is because Ad Valorem tax has two components. A tax rate (which is decreasing from $.63/$100 valuation to $.60/$100 valuation) and property value (which has increased, in most cases, anywhere from 5%-10% based on the area). In other words, the approximately 5% decrease in the tax rate will be more than offset, in many cases, by the increase in the home value.
The end result of all this is simple. The city is still going to receive an increase in tax revenues, but they are going to be smaller than they would otherwise be due to the pillow-soft revenue cap. This is the same type of fuzzy tax math that led the TLSPM to report that schools received a $4 Billion dollar "decrease" in funding a few years back despite the fact that overall funding increased during that time.
The problem is that, when reviewing ad valorem tax rates, the municipalities affected would like for you to think that the rate is the controlling factor. Increasingly. in the age of appraisal creep, it is not and any efforts by politicians to claim that they are "working for the people" by lowering their tax rate incrementally is a half-truth designed to cover the fact that they are receiving more revenue due to no actions of their own. Bill White was a master at this slight-of-hand, Parker less so.
In reality, the average Houston property owner is going to see an increase in their ad valorem tax bill from the prior year. That increase will be less than it would have been otherwise, but it will still be there.
When he first got involved in politics, Lt. Governor "King" Dan Patrick ran on a platform of capping appraisal increases at 3%-5%. This seemingly stopped being a priority of his when his friend, and current State Senator, Paul Bettencourt established "Bettencourt Tax Advisors" whose primary service was helping homeowners appeal increased valuations. It would be nice if that issue was still a priority of theirs.
Since it is not a priority Houstonians are left with one of two choices, either pay the increase in Ad Valorem tax or appeal their home's valuation, either on their own or through one of the many firms that offer help doing so. If you're lucky enough to receive a flat valuation then you will see a slight cut. (A home valued at $250,000 would see around a $75 savings)
However, the problem remains that using this "tax cut" as an argument against the City of Houston revenue cap is not as strong as supporters claim. The City of Houston is not losing revenue, they're just gaining it at a slower pace.
