This graph shows the month-by-month increase in the Austin metropolitan statistical area’s median home sales prices from March 2021 to March 2022, as tracked by the Austin Board of Realtors. That’s a 22% (about $100,000) increase. Within the city of Austin, the rate of increase was steeper and the prices higher. Sellers don’t need to disclose sales prices to the appraisal district, but the folks there can read the headlines. (Source: Austin Board of Realtors)
Busytown came to a complete halt for a moment last week when the Travis Central Appraisal District dropped its latest property valuations and took the public’s breath away. Even though home sale prices in Austin and Travis County are not routinely disclosed to TCAD, its appraisers can read, and they’ve seen the headlines each month about 30% growth in sales prices year over year, and so even with all the pressure upon them to undervalue Austin property as a form of tax relief, they can’t not raise the roof on property values; the question is just how much.
Do realize, dear readers, that these numbers are a starting point for negotiations. If you don’t protest your appraisal, regardless of what kind of property you own, you’re a fool and TCAD will genuinely not know what to do with you. The agency doesn’t have the staff or the time to really individualize these appraisals and so they’re willing to listen when owners say, “But this and this.” Sometimes you luck out, as I did last year, and find that the appraiser is ready to offer a valuation that’s lower than your target. Just do it. You can hire people to do it for you if you’re not someone (like me) who really geeks out on real estate stuff.
Do realize also that commercial property owners hire skilled experts to do this for them and almost never, ever, ever fail to get steep reductions on appraised value. People like Paul Bettencourt, who also just happens to write Texas property tax law as a state senator, nice gig. In more sane states that have seen fast-changing property values and economic fortunes, in both directions, taxing entities can just say that due to current conditions, they’re going to only tax a portion of a property’s appraised value, without having to institutionalize separate exemptions. Texas doesn’t allow that.
Nor Does It Allow Tax Hikes
Lest you think your or your landlord’s property tax bill is going up 30% as a consequence, not in this state! Remember all this noise we made about “revenue caps”? That’s because state law, written by Bettencourt, says the maximum tax rate a city or county can levy is one that brings in no more than 3.5% additional revenue than the year before – that being the ballpark rate of inflation for the years prior to the 2019 session at which the cap was adopted. It was formerly 8%; when COVID and then Winter Storm Uri hit, the reduction to 3.5% was delayed by the law’s waiver of the cap in emergencies, which are normally more localized. School districts have different, but equally austere, limitations on their tax rates.
So what this means for Austin and every other major Texas city that’s growing faster than the state as a whole (most of them) is that they have no choice this summer but to steeply lower their tax rates. The only people who are going to be paying closer to full freight for their ballooning valuations are those who put property (including improvements) on the tax rolls in 2021, so new construction, of which there is a lot in Austin, enough to make its sundry owners an empowered lobbying force at all levels of government. Some of that new construction is intended to be affordable but TCAD does not really have a way of making its tax appraisals reflect this, another consequence of the Texas taxation tradition.
Do you see where we’re heading with this? We need to change state law.
Us? Austin? Are You High?
There is no chance in hell that, regardless of the outcome of the November elections, the 88th Texas Legislature will have any other real mandate than to lower property taxes by any means necessary. Again, this is going down in every booming Texas community, not just blue cities but also places like The Woodlands and Frisco that are adding commercial property at an enormous rate. We have Tesla, but they all have Amazon warehouses and giant mail-order businesses and sportsplexes and entertainment hubs and outlet malls. They don’t wanna pay, either!
So can you see how we forge a purple tide here? The way we did in 2018 when Beto O’Rourke, though himself not a victor, propelled enough new Democrats into the Lege and chastened enough MAGAnational Republicans therein to deliver the biggest fix to school finance in 20 years. Then we had a plague and the wackass 2020 cycle and last year’s endless Fox News special docuseries that was the 87th Lege, and everyone forgot to keep those swing voters happy. So is there now a totally new battlefield on which to fight for better, more equitable tax policy, in ways that many GOP lawmakers are not going to find repulsive? This is a real test for Texas Democrats and their ability to take the lead on issues even if they remain a permanent minority. That’s how Dems in red states have made small but important stuff happen for years, and how they had candidates at the ready to win, for example, the Kansas governorship when the opportunity arose. Their constituents do not spend nearly as much time as do Texas Democrats wringing their hands and bewailing their own clumsiness, fumbling a ball that is really closer than we think. We need to get on top of this.