Frequently Asked Questions - Q29


Question:

“Let The People Vote On Taxes”. Clever slogan, but you know that the City’s property tax rate for maintenance and operations is already capped at $0.50/$100 valuation, by a charter amendment passed by taxpayers in the early 1980s. Therefore, isn’t this amendment unnecessary relative to property taxes?

Answer:

Property tax considerations actually are a driving force behind the need for this amendment. The property tax rate is only one multiplier in the formula for computing a taxpayer’s property taxes. The other multiplier is the taxable appraised value. The need to control both tax multipliers is one of several driving factors behind this amendment. Houstonians’ appraised values are rapidly escalating, well in excess of the rate of inflation, with no relief in sight over the next few years. According to Paul Bettencourt, Harris County Tax Assessor/Collector, the average tax bill for Houston homes exploded 73% in just the five years from 1997 to 2002. Often overlooked is the fact that the debt service component of the property tax rate is not included in the $0.50/$100 cap mentioned in the question. City Council is currently free to adjust the debt service component without voter approval. This amendment requires the City to place the debt service component into the overall prioritization of fiscal needs. The truth of the matter is that, theoretically, a property tax rate (as well as a sales tax rate) should never have to be increased. That is because the same factors driving the added cost of services (increases in population and inflation) also cause the valuation of the tax base to increase, resulting in automatic increases in City revenues. A city that properly manages its finances should never need a property or sales tax rate increase. Regardless, the City of Houston has increased its property tax rate by over 34% since 1982.



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