Posted by
The Adjuster! on Friday, October 23, 2009 3:36:52 PM
A general election will take place in less than two weeks. The ballot in Texas will include eleven proposals for amending the state’s constitution. For those of you who live in Texas, you should already know that the Constitution of the State of Texas is highly detailed and sets forth not only how the state’s government is to be constituted but how it is to operate as well. That includes telling the legislature what it can and cannot do. Because the founding document is highly detailed, in many cases before the legislature can change the statutes, the constitution must first be amended by the people. That is what is going to happen in a few days.
Why is this significant today? Well, it’s because e-mails have been circulating lately about the proposed constitutional amendments which will be on the ballot on November 3, 2009. Those mails have for the most part urged Texas voters to vote No or against passage of the amendments claiming they will raise your taxes. That is not true. Although your taxes might get raised, it will not be because of any of these three amendments. If anything, the amendments will likely cause your taxes to go down or maybe even prevent them from rising further.
The following is what my research shows:
Proposition 2, 3 & 5 are all really part of the same issue. For some reason, simplicity or law they have been separated. First of all Texans have always been taxed in Texas on property both real and personal. Real property is land and anything permanently attached to the land. Everything else is personal property. It makes no difference whether it used for earning income, it is all personal property, either private or business. Generally speaking property is always taxed on an ad valorem basis. Ad valorem is a Latin term meaning "at the value of."
The State of Texas does not tax property directly for ad valorem taxes, but it does permit the taxation. Actually the legislature authorizes certain entities such as the county, the school districts, hospital districts, utility districts and others to assess and collect taxes from Texans based on the value of their property.
Those entities establish the value of the property and determine the amount of tax to be assessed against it. The tax rate is usually an amount of money per 100 dollars worth of property, or something similar. For example: the 2007 tax rate for Harris County was 0.392390. For a $120,000 evaluation of a single family dwelling the assessed tax would be $392.39. (Tax rate times value divided by 100)
Of course each taxing entity sets its own rates. If you don’t like the rate, contact Commissioners Court. If you don’t like the evaluation, contact the appraisal district.
You can fight the amount of the tax in elections and other actions. But they can hurt you whether it is by the tax rate or in the evaluation of the property. Each year a tax evaluator can visit the property and set its value based on age, condition and the use to which the land is being put. If the evaluator raises the taxable value of the land your taxes go up. If for some reason the evaluation is lowered, your taxes will go down.
If you own a lot with a house on it, the land is said to be used as a personal residence and should be taxed that way. But sometimes they use a "best or highest" use of the property to value it. Therefore, a small house located near a shopping center could be said to have its highest value as a parking garage with a value hundreds of thousands of dollars more than the little house.
Even though it is now just a little house, it can be said that the land would be worth so much more if the house were torn down and parking garage built there. In other words making the taxable value of the land much higher based on a better use of the land. The owner of the house might be required to pay a much higher tax on his property even though was still being used only as a residence.
The first part of the amendment, Proposition 2, addresses that problem by limiting the state to allowing nothing more than the residential value of the land on which your house sits regardless of the highest or best use to which it could be put. The owner must live in the house and it must be a Texas Homestead to get the protection but right now, you don't even have that. So vote on Preposition 2 accordingly.
Currently, the methods used in establishing the ad valorem value of property are set by the local taxing authority. As a result there are many different methods followed. Those differences often produce vast differences in the amount of tax collected.
The second part, or Proposition 3, attempts to take care of the problem of varying methodologies by standardizing the method for all taxing entities. It will provide for the administration and enforcement of uniform standards so that all taxing authorities are on the same page in how they determine the value of your property and therefore how much tax you will owe.
Presently if property you own is in two or more taxing districts, such as mine, you can have three or more taxing authorities evaluating your property, determining the tax rate and collecting taxes from you. It is very confusing. In my case I am in a county which taxes me. I live in a municipal utility district which taxes me. I live in a hospital district which taxes me and two school districts which tax my property. All of them tax at different rates. They each set values on my property following different methods and reaching far different results and each has its own equalization board. It can be a nightmare.
Proposition 3 will, if passed, authorize the legislature to allow a single board of equalization for two or more adjoining appraisal entities that elect to provide for consolidated equalization. That would be something you could control through your voting rights in the taxing entity.
So, most of what has been written about those three propositions has either been mis-leading or outright false. The faulty interpretation lies, I think, in the lack of knowledge as to how the Texas Constitution works and what it says. I would not recommend voting against any of these three propositions. In fact I intend to vote for them in the interest of protecting my own property.
If you want to learn more about your taxes look up the name of your county Tax Assessor/Collector. Call that office. They may have a website. If not, visit the office and ask for information. They work for you.