Tax rate cuts are like bluebonnets – temporary and sometimes non-existent beauties that fade with the season. Even when tax rates are cut in one taxing entity, other entities will often hike your rate, and it is likely your appraisal goes up as well, making any joy you got from a rate cut in one place totally null and void.
The Round Rock City Council voted last night to hike the tax rate, citing lower property values. They didn’t increase the budget (it’s at $134.7 million), though more of the money they’ve planned to spend will come out of the reserve fund. The rate change is from 41.728 cents per $100 of valuation to 42.321 cents. This is after Round Rock ISD cut their tax rate, meaning taxpayers in that part of Williamson County enjoyed but a brief respite before being shackled once more.
Property values are down in many places, one of the effects of the overall recessed economy. It is definitely a buyers’ market, and property values usually reflect that. You’ll still find that even if tax rates stay the same, appraisals will go up. They may be down by 2 or 3%, but that means that you could find yourself paying much more in taxes the following year, since appraisal districts can hike your appraisal by as much as 10% every year. When you take into consideration the tax rate change on top of that, we’re more or less talking about a buyer being swindled – lulled into a community by lower sales prices and modest tax hike, only to get slammed with a high appraisal (which doesn’t take into account what the buyer actually paid for the property) the following year.
Because Round Rock ISD opted not to hike their rate this year, and cut it besides, Round Rock taxpayers will have a slightly easier time of it going into the new appraisal year. But they should watch those appraisals very carefully. There will be pressure on the appraisal district to kick appraisals up a notch (it won’t be public or even blatant – but bet on it, they’ll feel the pressure as local governments always want more money to spend).
Most homeowners don’t write a check for their property taxes – the taxes are withdrawn from escrow accounts or are otherwise built into mortgages, and aside from the notice received from the appraisal district or other county office, there’s no “wow, I owe how much??” moment for homeowners. This is dangerous, even more so than income tax withholding, because it allows otherwise reasonable people to believe that the services provided by local governments are “free.” How many times have you heard that, especially about public school? “We send our kids to public schools because they’re free.”
Oh, honey. They’re not free. You just didn’t read the bill.
What this comes down to: limits on tax rates won’t save you, because appraisals are notoriously fickle, but appraisal caps don’t save you either, because tax rates are many and varied. What do we need, then? Spending cuts and spending limits. Say it with me: spending cuts and spending limits.
At every level.