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This week I will continue to discuss the constitutional amendments that will appear on the November 6th ballot. These amendments were joint resolutions that were passed during the recent legislative session; however, because they change the Texas Constitution, voters have the opportunity to approve or disapprove of the amendments in a state-wide election. Over the next several weeks I will continue to write about each of the 16 propositions, and include supporting and opposing arguments.
Proposition 3: Annual 10 % cap on increases in homestead taxable value
Currently, the Texas Constitution authorizes the legislature to limit the maximum average annual percentage increase in the taxable appraised value of a residence homestead to 10 percent or more, for each year since the most recent tax appraisal of the homestead. Some appraisal districts determine the taxable value of a property on an annual basis, but some appraise every three years, allowing an increase in taxable value as high as 30 percent--an average maximum increase of 10 percent per year. The proposition would allow the legislature to limit to 10 percent or more the increase in taxable value for residence homesteads from one appraisal to another. Legislation was passed during the recent legislative session that would enact the 10 percent appraisal cap, but will only take effect if Proposition 3 is approved by voters.
Supporters say that when the legislature proposed the limitation on increases in appraised value of residence homesteads in 1997 and the voters approved it, the legislature and the voters understood the limitation to prohibit the appraised value of a homestead from being increased by more than 10 percent from year to year. The intent was to protect homeowners from the hardship of having their ad valorem taxes increased substantially from one year to the next as a result of appraisal increases. Instead, the limitation has been construed by many appraisal districts that do not appraise property annually to authorize increases of up to 30 percent in the year in which a residence homestead is reappraised for tax purposes, resulting in "sticker shock" for homeowners. Proposition 3 would conform the language of the Texas Constitution to the legislature’s intent and the voters’ understanding of the original limitations on taxable appraised value increases.
Opponents believe that Prop. 3 is unnecessary because appraisal districts in most counties that are experiencing rapid increases in property values already appraise property annually. To avoid losing revenue when property values are increasing, smaller districts with less growth that now appraise property less frequently would be compelled to appraise property on an annual basis, and at a greater expense. Opponents also say that increases of more than 10 percent are uncommon because property values tend to increase more slowly in smaller-growth appraisal districts. To the extent that the proposed amendment reduces the property tax burden of the homeowner whose property value is increasing rapidly, the amendment could have the effect of shifting the tax burden to other taxpayers, including owners of commercial property, and the owners of homes with less rapidly rising values.
You can view a complete list of the proposed constitutional amendments with analyses online at www.tlc.state.tx.us. For more information regarding these propositions, please contact my office by writing to P.O. Box 2910, Austin, TX 78768-2910 or by emailing me at larry.phillips@house.state.tx.us. My district office phone number is (903) 891-7297.
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