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Reader examines appraisals and tax rates

June 10, 2014 at 1:10 a.m.


Editor, the Advocate:

With property appraisals on the rise again, I'd like to follow up my letter from May 16, 2013, entitled "Flat rate means taxes rise with appraisals" to examine how last year's quantum leap in appraisals was disingenuously converted into higher tax bills by our taxing bodies.

It's beyond time to demystify the relationship between Central Appraisal District appraisals, tax rates and tax revenue.

Some folks may have felt a false sense of relief from last year's appraisals when the taxing bodies adopted "flat" or slightly reduced tax rates. In reality, they increased their property tax collections significantly by around 8 percent. [Sources: 2014 County Budget, 2013-14 City Budget, 2013 VISD CAFR]

So how can they increase our tax bills if they don't increase their tax rates? Simply put, tax revenue is the result of multiplying the tax rate and the CAD-certified total tax base valuation (sum of appraisals). The tax rate set by the taxing bodies is a flexible value that should be the result of dividing budgeted tax revenue requirements by the total valuation. Instead, in passive-aggressive fashion, they typically decide to hold the rate close to the previous rate and multiply it by the valuation, creating a tax increase when appraisals increase.

To inform the public of the tax rate needed to avoid increasing taxes, the taxing bodies are required to publish an effective tax rate - the rate that would generate similar revenue to the year before from properties taxed in both years. It provides for an increase in revenue from new property. The problem for homeowners arises when the effective rate gets totally ignored by the taxers. Instead of using the effective rate as the baseline it's intended to be, they cunningly use the previous year's rate as a tax-increasing starting point.

I encourage every citizen and elected representative to promote the adoption of effective tax rates annually, which would peg property tax revenue increases to tax base growth. What better way to put an auto-correcting throttle on tax collections than to anchor them to the highly praised economic development policies of the past?

Chad Byrd, Victoria

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