A record number of tax appraisal lawsuits along with rising home values and a backlog of 11,000 homestead exemptions has led to a $2.3 billion tax value loss for Montgomery County, resulting in an $8.8 million shortage in tax revenue.

What you need to know

The Montgomery County Commissioners Court met Aug. 1 to accept the statutory tax rate limits ahead of budget workshops starting Aug. 8. These limits provide guidelines for the court when it comes to setting the tax rate, such as when voter approval is necessary and what the no-new-revenue rates are.

During the meeting, Montgomery County Tax Assessor-Collector Tammy McRae informed the court of a $2.3 billion taxable property value loss due to a number of factors McRae said emerged from the previous Montgomery County Appraisal District administration.

How we got here

According to McRae, Montgomery County has seen a record number of lawsuits over property tax appraisals since 2022.
  • 250 lawsuits filed in 2022
  • 700 lawsuits filed in 2023
  • 19,500 protests from 2023 still under review, with more lawsuits anticipated
The other major contributing factor is roughly 11,000 homestead exemption filings, which delayed processing by MCAD. With Montgomery County offering a 20% homestead exemption, the influx of exemptions that were delayed caused a significant drop in the taxable values the tax rate projects are based on, she said.

What’s next

McRae said during the Aug. 1 meeting an additional $61 million in value was lost in late July, but could not be taken into account due to statutory deadlines on certification of the tax rolls. Based on the data she has, McRae informed the court of several key factors:
  • A $4 million-$6 million property tax revenue shortfall
  • $300 million in total property tax revenue collections
  • A collections rate of 94%, down from previous years

What they’re saying

“We've never had a year quite like this one. We lost a lot of value last year and said certification. We always lose value, the tax roll once it's certified,” McRae said. “I made an adjustment because I thought we would lose approximately $784.6 million [in value], and that's more than ever before. We make that adjustment based on historical data. Well, in reality, we lost $2.37 billion.”

“It doesn't matter what or how much new revenue comes in while we're talking about the budget," Montgomery County Precinct 3 Commissioner James Noack said. "These are the rates that we have to work with. It's not until the next tax year where [McRae] can't use these rates anymore, and she has to use the actual value and that's where we lost.”

McRae said the county is not alone with this issue.

“We're not the only taxing jurisdiction in this shape; anyone that offered a homestead exemption: city of Conroe, Conroe ISD and the other cities are in the same shape,” McRae said.