SENATOR KOLKHORST PUSHES PASSAGE OF TAX RELIEF PACKAGE

  

The Texas Senate on Tuesday voted 18-12 to approve a bill that is designed to slow the increase of local property taxes.

State Senator Lois W. Kolkhorst

In passing Senate Bill 2, authored by Senator Paul Bettencourt (R-Houston) and co-authored by Senator Lois Kolkhorst (R-Brenham), the trigger rate for an election was lowered to five percent from the current eight percent when a local government entity attempts to increase its tax collections.  The bill requires an automatic election if the five percent rollback rate is exceeded, and also creates a Property Tax Advisory Board at the office of the Texas Comptroller.

"Everyone agrees that property taxes are too high. That's why I was proud to co-author and pass Senate Bill 2, the Texas Property Tax Reform and Relief Act. This common sense proposal will provide appraisal reform and give voters the final approval over property tax hikes," said Kolkhorst.

"Texas still has work to do on addressing our reliance on property taxes for public schools. In the meantime, Senate Bill 2 provides the purest form of local control possible because it gives taxpayers the final say and keeps power where it belongs, with the people."

The Senate also took action to pass Senate Bill 17, authored by Senator Jane Nelson (R-Flower Mound) and co-authored by Senator Kolkhorst.  The proposal provides tax relief for businesses and encourages economic growth by reducing the franchise tax every biennium, so long as the Comptroller certifies that the state will experience revenue growth of at least five percent.

"Job creation is the lifeblood of our economy and Texas businesses need help with the burden of our state's franchise tax," said Kolkhorst. "With Senate Bill 17, we are sending a message that Texas is open for business by phasing out the franchise tax. The Texas economy will grow as businesses will begin to invest in jobs for Texans, rather than paying more in taxes."

Senate Bill 2 and Senate Bill 17 now move to the Texas House of Representatives for consideration.

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6 Comments

  1. Thank you Mr. Palmer for that well written explanation of WHO determines what we pay in property taxes. Clearly it is the STATE and this bill is certainly a smokescreen. It is is clear that the change from 8% to 5%, is meaningless when the state will just increase the property values even more to the equivalent of 8% or more. What my grandmother called “blarney”. Hope a few locals will read and receive enlightenment and that they will become tired of being made fools.

  2. You want to know why your LOCAL property taxes go up, it is because of the Texas Legislature. This bill does nothing to address the real problem.

    What this bill does is limit the LOCAL entities from raising the tax rate over 5% in one year, if they do, then the citizens can call for an election to thwart it.. In previous years it was 8%, again set by the legislators.

    The legislators are manipulating public school finance. It takes some understanding of some things to start.

    Property taxes are not a STATE tax, they are set by LOCAL school, city and other entities to pay for public education and services. Even if you rent, you pay the property tax indirectly. The rent you pay is used to pay the property taxes. Same thing with a business. They indirectly calculate the charges they collect for their services so that they get enough to pay the property taxes on the business property or rent.

    Here is the thing that most people do not know, the State Legislature makes the rules on how the funds are collected, what the values of properties are in a county and how to distribute the funds.

    The State Comptroller does a Property Value Study of all the counties in the state. They “help to insure equitable distribution of state funding for public education. They conduct a PROPERTY VALUE STUDY to estimate a school district’s taxable property value. Why is that important? Because that information is then given to the Tax Assessor/Collector to be used as the total amount of tax value for the County. The Tax Assessor’s job is to decide how much to assess EACH property in the County to come up with the TOTAL PROPERTY VALUE the state legislature body came up with.

    If you want to find out more about what a Property Value Study looks like, go to the COMPTROLLER.TEXAS.GOV website. Find School and Appraisal District’s Property Value Study 2015 FINAL Findings. There you can look through all the County Appraisal Districts (CAD) by county. Go to Washington CAD. There you can find Burton and Brenham. For info on how they get to those numbers and what it all means, talk to Willy.

    Willy D has to divide that VALUE among all the residential property, commercial property, industrial, Utilities, oil and gas property values, farm and ranches with or without ag exemptions, senior citizen freeze, exempt property like churches and schools, He has to calculate homestead exemptions. He has to calculate things like what is the typical inventory for car dealers, tractor dealers, trailer homes, sheds, and any improvements since the last PVS two years ago.

    The thing to remember though is, the State Comptroller has already decided the final value of all these things. Willy has to decide how much of that final PVS is he going to have each business, industry, farm and other categories pay of that final PVS. You see, Willy has to meet a pre-determined value. His total tax assessment has to be within 5% of the state’s. If not, Willy has to do it again or the state penalizes him and the district.

    When the state did their assessment, they could have increased the value of a thousand acre tract by 20%, based on land sold around the place for putting in a residential development of 50 new homes. Even though that 1,000 acre owner has no intention of selling and did not improvements. But the land next to him went up in value because it was sold by the square foot and had highway frontage. Now all the property around it is worth more because of new businesses that may come in, improvements made to the drainage, landscaping, etc.

    Willy does not want to inflict an increase on that landowner of 20%, because the law limits how much the values can go up each year. So Willy adds 3-5% to properties within say two miles of that new development.

    In another case, mineral values decline since the PVS. Willy has to lower their values, but his overall PVS is up over 15%, so he has to “catch up” somewhere else. So maybe he spreads that across farm and ranch properties.

    Willy does not have a lot of freedom on how to calculate his tax assessment, because he always has that “target” number that the state comptroller came up with. And that number is going to be higher each year. Why? Because the increase in the LOCAL property tax benefits the STATE taxes? What? You thought they were separate?

    This is where public education finance gets even more confusing. The state of Texas legislature benefits when the local district’s values exceed a value per student set by the state legislature, the district is designated as a “wealthy” district. The district is required to forfeit their “extra” funds to the state. The state basically “blesses” the LOCAL TAX money and converts it to “STATE MONEY” to pay part of the state’s share of the funding for “poor” districts. Yeah, they take money from the LOCAL TAXes paid by LOCAL citizens to fund their school, and have it funneled to the state coffers, and then REDISTRIBUTED as STATE REVENUES to pay the state’s obligations to support public education in all of Texas!

    Used to, local school boards could set a tax rate to pay for a current school year, pay off bonds and when the bonds were paid off, taxes would go down because the bond was paid off. In Burton’s case, it is actually cost effective to pass a bond. That is because the money the district would have to send to the state for Robin Hood or recapture can be used to pay the bond.

    Ten years ago there were 142 districts paying into “Robin Hood” to finance public education across Texas. Today there are 264 of around 1,000 districts paying into “Robin Hood”. Houston ISD became a victim this year. They owe $162 million to “Robin Hood”. The total amount of “Robin Hood” funds collected by the state in this two year term is estimated at almost $4 billion. This increased funding from higher Property Value Studies has enabled the state share of funding for public education to drop from 45.9% to 37.9% of the budget.

    The House has signaled it is willing to consider tax reform. The SENATE, under Patrick, has said NO. This bill is just another attempt to make it appear the SENATE is trying to help LOCAL taxpayers, while in effect, they are still siphoning off LOCAL TAXES into another pot of money at the state level and pronouncing it as STATE money. It is not. What is currently happening is of no benefit to any LOCAL taxpayer in Washington county. This bill will do nothing to remedy the cause. It is an attempt to deflect the blame to Willy and the LOCAL entities that have been very conservative in their budgets and in using the resources provided by LOCAL taxpayers.

  3. This is a Great start to help curb the high cost of property taxes, The appraisal district also needs to work on Taxing properties with consistence, Right now I see homes with the same square footage, Same amount of land , same area, with inconstant values as much as a $200,000 difference in value, That is Crazy, Also I purchased a home over 7 months ago, I have yet to be told what value it has been appraised at. I am told I will get a notice a few months before the tax bill comes out. By then it will be too late to “Protest” my value if they have appraised it too high. I do not mind paying my “fair share” of taxes , But I also would like to see homes being taxed more consistently. With all the new homes I see coming up in Brenham You cant tell me that the tax appraiser is not getting their far share of taxes from the hard working people of Washington county .

    1. I totally agree with you. This bill is a fantastic start! However, there needs to be oversight and control over valuations as well. They can still raise the valuations to get the money they want. There needs to be control over spending. We need to be smart and conservative with how our tax dollars are spent. Keep up the good work Mrs. Koolkhorst! You make us proud!!!

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