“The appraisal district is conducting a reappraisal for 2018—just as we do every year. The major difference is areas impacted by Harvey are being prioritized,” said Cheryl Evans, chief appraiser for the Brazoria County Appraisal District.
As of mid-January, about 14,500 parcels had been re-evaluated solely due to the damage caused by Harvey, she said.
That there could be a decrease in tax revenue seems likely, but many officials are in a wait-and-see mode.
“Yes, it is a concern,” Brazoria County Judge Matt Sebesta said. “But it’s very early in the process and too early to say how things will go. … We really won’t know until we get the number.”
Some homes may be fully restored while others are in various stages of repair or are a total loss, Sebesta said. Also, homes that did not flood could increase in value.
“We had close to 13,000 homes that received water, from half an inch to 8 feet. Those improvement values will come off the rolls,” he said.
Property taxes are dependent on two variables: values and tax rates. Values are set by the appraisal districts; rates are determined by each individual taxing entity, such as a school board or a city council.
The Brazoria County appraiser alone services 75 taxing entities, from the city of Pearland to the Treasure Island MUD—all of which stand to lose revenue if the values of their tax base take a hit—and if they hold tax rates flat.
Because storm damage and flooding is a factor this year, homeowners should collect photos and records of damage and work done by contractors, Galveston County Tax Assessor-Collector Cheryl Johnson said. If repairs are underway or finished, homeowners should work with their contractor to determine what the status of the property was as of Jan. 1.
Preliminary value notices should go out to property owners in April. Then the protest period begins, with May 15 as the deadline to file an appeal.
The final numbers are not certified until June or July; then governments can take a hard look at their budgets.
Tighten the belt or raise taxes?
“Every single government will be impacted,” Johnson said. Her office collects revenue for over 35 different entities, including the city of Friendswood. “It will be good for all the governments to step back … maybe all of us need to look at reductions.”
Governments can raise the tax rate to make up for losses, but officials have said this is not the right time for increases. It would also buck the trend: Both Galveston and Brazoria counties have been lowering tax rates for years.
“I’m really proud that here, we’ve lowered the tax rate 6 cents over the last three years—that’s an almost 12 percent cut,” Sebesta said.
That has been possible in part because the county has a housing shortage, he said, which has kept home values—and revenue—high.
School districts have also benefited from rising home values but would be sensitive to a decline in funding.
“We would tighten our belts,” said Connie Morgenroth, Friendswood ISD’s chief financial officer. “We would look at raises, for example, and instead of giving X percent, we give Y percent.”
School districts have one other variable to consider: the state’s matching funds, which are inversely based on the previous year’s property taxes after they are certified by the Texas comptroller.
In other words, if property taxes are high, the state will give less funding the following year. So in a year when tax revenue falls, it would take the state a full year to balance it out.
However, the commissioner of education has the ability to mitigate a shortfall by using funds set aside for districts affected by a state of disaster, but no decision has been made on whether that will be needed, a spokesperson for the Texas Education Agency said.