This page is a work in progress analysis for reform of the Texas taxation situation. The goal is to identify where the spending is going, which areas better manage their resources and why, and where people are rightfully complaining.

There are multiple competing theories on why people are upset about property taxes. I'm going to try to get to the bottom of the emotion through some analysis and looking at some of the competing theories.

Theories

One theory about the tax increases is as follows:

business interests established a way to:

1.) Mask property value on commercial property which would lower their rates
2.) Force assessors to bear the costs of overestimation of assessed value -causing assessors to be very careful not to assess commercial property too high.

Rural School District funding Robs from Rich Districts?

It is said that some rural districts provide agricultural exemptions excessively. So long as there is a cow or two on the property, it can be justified as ag-exempt. Rural districts would be funding their schools somehow or another. But, how? Well, Texas has this robin-hood plan, whereby poor school districts are funded by richer school districts. I don't know the exact formula, but I think it was like 1/3 or so of a rich district's extra money would go to a poor school district. Ever drive around in the country and see these really fancy schools in the middle of nowhere? Maybe that explains it. From what I can tell, in a way, the poor districts are incentivized to include as much ag-exemption as possible because the rich districts will cover them. With the loss of this tax revenue, it is expected that the taxing authorities in richer districts would need to make up for the lost budget somehow. According to the story so far, the rich districts are now bearing the burden for the agricultural exemptions as well as commercial interests. I wonder who might get to pay for all those fancy schools being built in the richer districts? Do you think the taxing authorities - when given the option of budget failures and increasing debt, or not lowering the taxing rates as property values increase would choose the latter?

Well, that's one part of the story. Though it is compelling, I don't yet know if it is true. I don't even know if there is enough data to determine if it is true!

=Population Growth Driven by Business Growth

Perhaps another part of the story is that the various sweet deals the governor has been making to entice companies into Texas has resulted in an attractive job climate, which, of course, brings more people, and causes a housing shortage in some areas? This may be reflected in the overall numbers of housing permit trending upwards and the skyrocketing values of existing homes.

Expansion of Cheap Credit for Underqualified People Resulting in Crash, Subsequent Glut, Housing Market Value Decline, and Taxing Bodies scrambling to keep up

Lastly, we have to think back to the economic implosion of 2008 or so. As best I understand it, the federal government made it very profitable for some companies to grant housing loans to people who couldn't ordinarily qualify. This drove housing values up in many places and the taxing bodies may have begun to build some cool stuff as a result. New football fields, anyone? But then, POP, the bottom dropped out of the market, and I wonder what that did to house values? Suddenly many people were without a home, and I suppose that caused an increase in available housing, dropping the values, and consequently tax revenues? If this part of the story is true, I'd expect that there would be a delayed reaction in assessments from 2008 - maybe 2-5 years, before the taxing bodies could catch up and make adjustments. Having lost all that beautiful revenue, they would need to make up for lost time.

Anyway, I am under some pressure to get this analysis completed given the pending legislation in the Texas session this year, but hopefully this at least gives people some things to think about. Let's start with Jasper county to see what happened.

Analysis

I started by picking a county for which one individual was frustrated by the property taxation. I downloaded the data for the taxing districts which that individual may be subject to and began analysis of the rates and the values. Time permitting, I'll do some analysis of other county situations as well. First though, let's note that the Texas economy is doing well for now. Single family dwelling building permits are trending upward and multi-family dwellings are trending downward. I suppose that means demand for house construction is greater than for apartments. For Texas overall, unEmployment is trending downward, but I'll want to make sure they aren't using tricks like tossing out people that aren't working, but just gave up looking.

Jasper County Analysis

Jasper County has a rate of 0.65 [1] The rates were as low as 0.43 back in 1998, trended up to 0.70 in 2006 and have been trending down since then.
City of Jasper has a rate of 0.3182
Jasper County Water Control & Improvement District #1 has a rate of 0.293
Jasper County Emergency Services District #1 through #4 has a rate of 0.03, respectively.

LVT Sample Analysis

I should warn of my bias. I am a proponent of what is called the Land Value Tax (see Harmonious Tax Reform for various ethical reasons. I believe it COULD better serve Texas, but won't know until I do some more thorough analysis.

To start, I selected a house listed for sale and checked on its land and improvement taxes. This house in Montgomery for sale had its tax go up by 9% from 2014 to 2015. What changed in Montgomery county or did something change with the home itself? It appears that significant renovations were done on the home - driving its value up significantly in 2016, and significantly driving up the tax bill.

Under an LVT scheme, what would have happened? There would have been no increase in the taxes due to the improvements.

KSpect

Texas Tax Analysis

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