Rising property tax values in Montgomery County and across the state over the past few years are putting a strain on home and business owners. The issue prompted leaders in Texas government to explore ways to alleviate the growing burden prior to the start of the state legislative session Jan. 10.
“Make no bones about it, people across the state are screaming because of property values,” said state Rep. Mark Keough, R-The Woodlands. “The tax rate is going down, but assessed value is going up. The question is, ‘How do we resolve that?’”
Between 2011 and 2015, Montgomery County property tax levies increased by 38 percent, according to the Texas Comptroller of Public Accounts. However, property tax rates in the area over that same time decreased. The Woodlands Township’s property tax rate decreased from 32.74 cents to 23 cents per $100 valuation during that time period, while Montgomery County’s property tax rate decreased to 47.67 cents from 48.38 cents per $100 valuation.
In Montgomery County, average appraised home values have increased by 18 percent since 2014, according to the Montgomery Central Appraisal District. Additionally, between 2005 and 2015, overall market values increased by 142.9 percent for single-family homes in the county.
“The real estate market in Montgomery County has been very good,” said Tony Belinoski, deputy chief appraiser for MCAD. “Most of it is a direct relation of supply and demand. We have a lot of people moving in every year, as evident by all the new construction that is occurring.”
Local lawmakers, however, say the rate of increase is unsustainable.
“We all know Montgomery County has seen incredible population growth, however, the increase in property values has escalated far beyond the growth,” Keough said.
State Sen. Paul Bettencourt, R-Houston, chairs the Property Tax Committee established by Lt. Gov. Dan Patrick that was tasked with finding ways to alleviate the property tax burden during the 2017 legislative session.
“This is not an anti-government crusade; it’s a crusade for reality,” Bettencourt said. “My taxpayers’ realistic ability to pay has come into the equation.”
Possible relief for rising property appraisals being proposed by legislators this session ranges from mandating appraisal review board positions be elected officials to lowering the cap on appraisal increases.
In Texas, there was a constitutional cap created in the 1980s to prevent homeowners from being taxed more than 10 percent of the value of their home, meaning a residence valued at $100,000 cannot be held for more than $110,000 in tax liability in one year, Keough said.
“The purpose wasn’t to make a 10 percent increase part of the pay plan,” he said. “It was a 10 percent cap in case of a runaway [economy]. Now, these taxing entities use the 10 percent opportunity as if it was part of what they automatically get from the [taxpayers].”
In an effort to combat this issue, Keough filed House Bill 44, which would place a maximum limitation of 105 percent on appraised value as opposed to 110 percent. The bill was co-authored by two other state representatives in Montgomery County: Cecil Bell, R-Magnolia, and Will Metcalf, R-Conroe.
“House Bill 44 lowers the [appraisal] cap, eliminates the possibility of inflated appraisal values and allows business properties to be evaluated at the same cap as residential properties,” Keough said.
After releasing an interim report from the Select Senate Committee he chaired, Bettencourt filed Senate Bill 2 with co-author state Sen. Brandon Creighton, R-Conroe, which touches on almost all aspects of the state’s property tax system.
If passed into law, SB 2 would lower the rollback tax rate from 8 to 4 percent, mandate all members of appraisal district boards be elected officials, set deadlines for all property tax protests in Texas for May 15, and establish review panels in counties with populations of 120,000 or more to hear more complex taxpayer protests.
The rollback rate decrease means any tax rate increase resulting in at least 4 percent total revenue growth would have to be approved in an election by taxpayers.
“Texas taxpayers have been facing property tax bills that are increasing 2.5 to 3 times faster than median household income,” Bettencourt said. “Throughout Texas, in hearing after hearing, the Select Committee heard the same message loud and clear: Texans are asking for and deserve property tax relief.”
In an effort to protect home and business owners, Keough also filed HB 85 and HB 566, which would make the position of chief appraiser and the appraisal review board members elected positions in a county, respectively.
Currently, MCAD consists of five board members and the county’s tax assessor-collector, which is an elected position. The five board members are appointed by taxing entities in the county, and then the appraisal board appoints a chief appraiser.
“This bill would make the chief appraiser be elected by the people of the district,” Keough said. “The people need to be represented, and [right now] they’re not.”