Property Tax Reform Bill- SB2- puts Texas voters in control of property tax hikes

Property Tax Reform in Texas- 2019 SB2
Texas Property Tax Reform and Transparency Act 2019

Property tax reform — get the latest info about the passing of Senate Bill 2 and find out how it will impact your property taxes.

 

Homeowner concerns over high property taxes

Homeowners in Frisco, McKinney, Allen, and neighboring communities have been worried about their escalating property taxes for years. Calling for property tax reforms, many Texans have expressed concerns that their property tax bills are increasing at a much faster pace than their incomes.

 

Texas real estate market continues to grow, with home values across the state pushing up 7% over last year while homes in the Dallas market increased by 13% over the previous year. Analysts predict continued growth in the area and expect that Dallas will outperform the nation this year in home-value appreciation.

 

For homeowners, this increase in their home value is a double-edged sword. This increase is excellent for resell value, but painful when it comes to paying annual property taxes. Every dollar a home increases in value results in higher property taxes for the homeowner.

 

The result? Many homeowners feel they will be ‘taxed’ out of their American Dream before long.

 

Texas lawmakers make property tax reform a priority

It has been 40 years since any significant property tax reform initiatives have passed in Texas. But, the 86th session of the Texas Legislature changed that.

 

From the beginning of the legislative session, members of the House and Senate labeled property tax reform and school finance reform as top imperatives to solve for during the session. While the Senate emphasized property tax reform and the House pushed more for school finance reform, they eventually ironed out their differences and came together on a bipartisan solution to tackle these together due to the highly connected relationship to each other.

 

The 86th session ended with the passing of Senate Bill 2 for Property Tax Reform and House Bill 3 for Texas School Finance. See more information about the Texas School Finance bill.

 

Senate Bill 2- Texas Property Tax Reform and Transparency Act

Approved in the House on an 88-50 vote and in the Senate by a 21-9 vote, the Texas Property Tax Reform Bill of 2019 means to slow the growth of skyrocketing property taxes and provide more transparency into the calculation of property taxes.

 

Provisions of SB 2

The most notable provision of the 2019 Texas Property Tax Reform Bill puts a cap on the amount of property tax revenue for cities and counties at 3.5%. This cap means that if cities or counties want to raise the property tax rate above that level, a special election will be triggered automatically to allow the voters to approve or deny the take hike. A separate bill set the cap for school districts at 2.5%.

 

The old cap was set at 8% before a special election was required for voters to approve the tax rate increase. Legislature set this amount during the high inflation period of the 1980s.

 

Other provisions in SB 2 provide more support for homeowners who need assistance with property value appeals and calls for improvements in the notification process for property tax exemptions.

 

SB 2 is not a property tax reduction bill

It’s important to note that the Texas Property Tax Reform bill is not designed to reduce current property taxes, but rather to slow the growth of escalating property tax rates and give homeowners and voters more visibility into the process.

 

Texas Governor, Gregg Abbott released a statement this weekend saying, “For far too long, Texans have seen their property taxes skyrocket as they are reduced to tenants of their own land. Tonight, the Texas legislature took a meaningful step in reinforcing private property rights by reining in the power of local taxing entities, providing more transparency to the property tax process, and enacting long-awaited appraisal reforms.”

 

Opinions on both sides of the Texas Property Tax Reform and Transparency Act

Many proponents of the bill look at it as a way for the legislature to micromanage county and city decisions and interfere with local control. Many city leaders believe the property tax reform will limit how they decide to invest their tax revenue on public services such as parks and libraries or public safety such as police and other first responders.

 

“Dallas has acknowledged that we need to hire more uniformed officers and increase pay for all first responders…,” said Elizabeth Reich, chief financial officer for the City of Dallas.  “Not only could we not keep pace with current response levels, but we also would not be able to increase staffing or salaries to the levels we need.”

 

Proponents of SB 2 say it will help homeowners struggling with out of control property tax rates and shed light on how and who is taxing properties. Additionally, proponents believe the new property tax reform bill will enable taxpayers to participate in the rate change process, encourage voter engagement, and make the appraisal review board process fair, accountable, and transparent.

 

“Many will lament that Senate Bill 2 will cap our property tax revenues and violate the sacred principle of local control,” Collin County Judge Chris Hill said.
“But quite frankly, we know here that the purest form of local control is allowing our citizens to vote on these property tax increases.”

 

What do you think? Get in on the conversation with #SB2 and tell us how the Texas Property Tax Reform and Transparency Act will impact you.


About the Judi Wright Team

Judi Wright/The Judi Wright Team is a real estate group specializing in the suburbs of Frisco, Plano, and surrounding areas. Named the “Best Realtor in Dallas,” by D Magazine twelve times and a Five Star Realtor with Texas Monthly eight times. Judi is also a Company-Wide Top Performer with Ebby Halliday, a Berkshire Hathaway affiliate.

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