With local government budget season ramping up, Texas Scorecard asked county officials in the Metroplex about their plans for next year’s budgets and property taxes. Specifically, we asked if they intend to lower county property tax rates in response to rising property values and to budget based on the effective tax rate.
The “effective tax rate” is the calculated rate that will generate the same amount of tax revenue as the previous year from the same properties taxed the previous year. It excludes new construction and new properties, and the new tax revenue they generate.
The effective tax rate is the benchmark for setting property tax rates each year, not last year’s tax rate; there is no relation between adopted tax rates from year to year, because taxable property values change from year to year.
“To adopt the same tax rate as the year before is irrelevant to the calculation of taxes,” says former Tarrant County Tax Assessor Ron Wright. “The only way it would be relevant would be if other factors remained the same as the year before, but they never do.”
The effective rate changes every year as the taxable value of property changes. Local taxing entities must calculate their effective tax rate each year to comply with the state’s truth-in-taxation requirements.
The effective tax rate enables the public to evaluate the relationship between taxes for the prior year and for the current year.
Bottom line: A tax rate higher than the effective rate will result in an increase in taxes.
Rising property values yield lower effective rates. As property values rise, tax rates should fall. Entities that “keep tax rates the same” as values rise are actually raising taxes, giving themselves more money to spend.
“Government spending drives taxes,” Wright adds. “The more government spends, the more revenue it must have. That is true at the federal level, at the state level, and, in particular, at the local level.”
Texas Scorecard requested a brief statement from each county judge and commissioner in Collin, Dallas, Denton, Rockwall, and Tarrant counties. Below are their full and unedited comments.
Judge Keith Self (R–County Judge)
Collin County will receive more than $10 Million in property taxes from new construction alone to support the FY2019 budget, representing an increase of 4.5 percent of the total FY2018 tax-supported budget. The $10 Million does not include any increase in value of existing properties.
Absent an unexpected emergency, I expect to vote for the effective tax rate, which will require tight budget control and perhaps use of reserves to protect our citizens from the potential of a rapidly spiraling tax burden.
Commissioner Susan Fletcher (R–Precinct 1)
I am proud of the work that the court has done, especially since I took office four years ago, as the tax rate has dropped almost 20% ($0.2375 to $0.192246 per $100 – to become the lowest in the entire state,) and we have passed an effective tax rate for the last two years in a row. This has been possible due to the tremendous growth in the area, and in direct response to rising property values. While I cannot speculate at this early date, prior to our budget workshop in August, I do anticipate a rate drop.
Commissioner Cheryl Williams (R–Precinct 2)
I go into every budget session with a goal of reducing the burden on the taxpayers. This is especially true when there are significant increases in tax revenues due to increased property valuations. The Commissioner’s Court has reduced tax rates significantly since I have been on the Court, including adopting the Effective Tax Rate the last two years. I plan to continue to budget in the same conservative manner in the coming year.
Commissioner John Thomas (R–Precinct 3)
Commissioner Duncan Webb (R–Precinct 4)
Judge Clay Jenkins (D–County Judge)
I would like to see us pass a budget based on the effective rate. Dallas County is #1 in job growth in America and has the highest average weekly wages in Texas. That success has led to our taxpayers seeing unprecedented gains in home valuations. Rental property valuation are likewise increasing and rents are rising faster than wage growth. I’ve laid out my plan to balance the budget without debt at the effective rate which includes closing a jail tower and saving the county $20 million annually. We are able to do that because of our efforts at Criminal Justice Reform and lower crime rate.
Commissioner Theresa Daniel (D–Precinct 1)
Commissioner Mike Cantrell (R–Precinct 2)
Commissioner John Wiley Price (D–Precinct 3)
Commissioner Elba Garcia (D–Precinct 4)
Judge Mary Horn (R–County Judge)
The short answer to the question is NO.
The artificial limit on the flexibility of local governments to provide for the legitimate requirements of their citizens needlessly reduces the capacity of local governments to function effectively and efficiently. There have been several years that Denton County HAS adopted the calculated effective rate. While Denton County has always maintained a low tax rate, there was one year (2007) that it was necessary to increase the rate by 7% over the calculated effective rate – the rate increase from 21 cents to 23 cents. The primary factors figured into the decision to adopt this rate were (1) we wanted to pay down our voter approved debt and (2) we had the expense of a new satellite facility that houses multiple offices and a jail expansion necessitating an increase in the number of full time employees. Construction of the facilities is paid for out of I & S (bonded indebtedness) but to staff those facilities funds have to come out of M & O.
The point is simply this – as a fast growing county we need to have the ability to respond to the corresponding demand for services, more courts, increased jail and juvenile detention capacity, satellite offices, technological advances just to name a few outside of State mandated requirements such as court appointed attorney expenses that increase every year and the unpredictable cost of fuel and road & bridge maintenance due to weather.
Commissioner Hugh Coleman (R–Precinct 1)
Commissioner Ron Marchant (R–Precinct 2)
Denton County is the ninth largest county in the State of Texas in 2018 and has also been known as one of the fastest growing counties in the nation. As this growth continues, Denton County continues to face the challenges of expanding services, with its most important goal to provide the necessary services to its citizens in the most efficient and economical manner possible.
On July 25th of each year, the Chief Appraiser of the Denton County Central Appraisal District is required by law to certify the tax roll for the existing calendar year. Prior to this time, the Budget Office and County Auditor utilize estimates for property taxes using various assumptions including prior historical data, new housing starts, estimated increase in existing property, etc. Once the official tax roll is received, the Tax Assessor-Collector begins the process of calculating the effective and rollback tax rates for the County based on the certified tax roll. These rates are typically presented to the Commissioners Court at the last Commissioners Court meeting in July or the first meeting in August. Once these rates are presented to Commissioners Court the County can ascertain the actual amount of revenue that will be generated by the effective tax rate.
As of September, 2017 (during the Tax Year 2017 / Fiscal Year 2018 budget process and per the Texas Comptroller’s Website) only 2 counties out of 254 Texas Counties had a lower county tax rate than Denton County ultimately adopted and actually lowered the tax rate by over one penny from the previous tax year. Our current tax rate of .237812 is actually lower than it was in Fiscal Year 2009. And while it is early to give preliminary estimates regarding what the tax rate might be for the new fiscal year (Tax Year 2018 / Fiscal Year 2019), if it follows what we had last year, we might be looking at keeping a rate somewhere around the current adopted rate level. There is a potential that the FY2019 Debt Service Tax rate would be unchanged from the current rate of .064026 as well.
For FY2019 the Denton County Commissioners Court will continue to monitor and reaffirm its various financial policies on an annual basis and the budget will be prepared accordingly. Denton County continues to face the challenges of expanding services, with its most important goal to provide the necessary services to its citizens in the most efficient and economical manner possible.
Commissioner Bobbie Mitchell (R–Precinct 3)
Denton County is the ninth largest county in the State of Texas. As this growth continues, we continue to face the challenges of expanding services and still provide the necessary services to our citizens in the most efficient and economical manner possible.
I have been in an elected official for several years and have always advocated for lower taxes. As usual I go into the budget discussion trying to find a way to lower the tax rate and still provide the quality service the citizens deserve. I will be doing the same thing this year.
On July 25th of each year, the Denton County Central Appraisal District is required by law to certify the tax roll for the existing calendar year. Once the official tax roll is received, the Tax Assessor-Collector begins the process of calculating the effective and rollback tax rates for the County based on the certified tax roll. The Commissioners Court at the last Commissioners Court meeting in July or the first meeting in August. Once these rates are presented to Commissioners Court the County can ascertain the actual amount of revenue that will be generated by the effective tax rate and make the final decision.
Commissioner Andy Eads (R–Precinct 4)
As of today, June 11, 2018, we have not received a preliminary or certified tax roll for the new budget year. It has always been Denton County’s priority to keep the tax rate low. In fact, our rate remains one of the lowest in the state. Our spending is cautious and deliberate. We believe the hard-earned dollars of our citizens is precious, and we take that responsibility very seriously. I believe in maintaining the lowest possible tax rate for our citizens.
Denton County is one of the fastest growing counties in the state and the country. As such, we face the challenge of expanding services and roads to support the growth while remaining fiscally conservative and responsible. We will do the same later this summer when we have the final numbers, and we work to keep our county taxes low while providing quality services to our citizens.
The Commissioners Court will continue to monitor the rates and will work diligently to maintain our conservative traditions.
Judge David Sweet (R–County Judge)
Commissioner Cliff Sevier (R–Precinct 1)
Commissioner Lee Gilbert (R–Precinct 2)
Commissioner Dennis Bailey (R–Precinct 3)
The Effective Tax Rate calculated by the local Central Appraisal District is the base line I choose to use for budget negotiations. Expenditures must not exceed the Effective Tax Rate revenue including other additional sources.
Commissioner David Magness (R–Precinct 4)
Judge Glen Whitley (R–County Judge)
Commissioner Roy Charles Brooks (D–Precinct 1)
Commissioner Andy Nguyen (R–Precinct 2)
While we are still awaiting hard numbers through our lengthy budget process, I am hopeful the court will move to lower the tax rate, down as close to the effective tax rate as possible, as well as developing a homestead exemption option, so we do our best to be good stewards of the taxpayers’ money.
Commissioner Gary Fickes (R–Precinct 3)
Commissioner J.D. Johnson (R–Precinct 4)