Many Texans wonder why their property taxes are so much higher than the national average, and the answer we would usually give is, “It’s complicated.” However, the Texas Comptroller of Public Accounts has taken the time to lay out the LONG history of Texas property taxes. This article from the Comptroller’s office does a great job of explaining why property taxes in the great state of Texas are so complicated. In this post, the Home Tax Solutions team will break down a few of the most important property tax touchstones to help you better understand why your property taxes.
The First 100 Years of Texas History
Following Texas’ annexation into the United States, property taxes were used to support both local and state governments and services. As the population boomed, the badly managed property tax system became extremely problematic and difficult to enforce, leaving some parts of state and local governments struggling while others poorly managed their funds. Then, the Civil War began, and property tax assessment, collection, and utilization became extremely chaotic.
The Civil War & Reconstruction
Throughout the Civil War and Reconstruction eras in Texas, the management of property taxes was complicated at best and corrupt at worst. According to the 1880 census, the value of taxable properties in the state was $725 million, which was more than double the assessed values by the individual assessor-collector offices. Clearly, something was not right.
The 19th Century & the Great Depression
After the 1880 US census revealed serious concerns with the property tax assessment and collection system in Texas, lawmakers got to work improving taxing assessment policies and collections procedures. After less than 50 years making progress, the Great Depression struck, leaving Texans, and most other US residents, struggling financially. As of 1933, more than 20% of Texas property taxes were delinquent, and this didn’t improve until the 1940s.
The World War II Era & Continued Property Undervaluation
While property tax delinquency returned to the pre-depression averages in the 1940s, undervaluation of properties continued to be a serious issue. A 1945 Texas state auditor’s report showed that only seven counties were in compliance with the assessment and collection policy that a taxable property had to be assessed at 100% of its salable value. To make matters worse, the state wasn’t even able to collect property tax revenue in 1946, and in 1948, the general revenue portion of property taxes was done away with altogether.
State Property Taxes from the 1950s – 1980s
Throughout the 1950s, 60s, and 70s, more and more elements of the state property tax were repealed, including the state-wide school tax. In 1982, Texas finally abolished all forms of state property taxation. Instead, all property taxes were assessed and collected by local governments.
Local Property Taxes, the Peveto Bill & Tax Exemptions
In 1979, the Peveto Bill passed. This bill left the assessment and collection of property taxes up to the discretion of a system of county central appraisal districts. This bill established the foundation of the system still in use today. In the 1980s and 1990s, the current appraisal and collection policies were developed. As property tax prices started to climb, tax relief amendments were developed, including homestead exemptions.
The 2000s to Today
As Texas property taxes continued to climb, the US Census Bureau reported that the percentage of property taxes averaged 4.4% of the annual income of Texas property owners, this was the 9th highest in the US. Due to this high property tax to income ratio, the Texas Supreme Court reviewed property tax assessment and collection, leading to the declaration that the school finance system was unconstitutional. This legislation passed in 2006 required Texas school districts to decrease their maintenance and operations budgets by 1/3 over the next two years.
Even with these successes in the early 2000s, recent increases have left property owners struggling once again. School taxes continue to make up more than 50% of the tax increases. We’re likely going to see some additional changes to the Texas property tax system in the coming years, offering some relief to home and business owners. The Home Tax Solutions team will continue to do our utmost to keep you informed of these changes.
Home Tax Solutions Can Help
We’re hopeful that Texas property tax legislation will offer some continued relief for the growing property taxes in coming years. In the meantime, the Home Tax Solutions team can help by offering some relief through low interest property tax loans. If you’re ready to find out more, don’t hesitate to contact our team. We offer property tax loans for homeowners in all 254 Texas counties, and with five offices across the state, there’s a Home Tax Solutions location near you. To get started right away, complete our online application form today.