Texas Appraisal Caps Bad Public Policy

A Bill has been introduced this session (S.B. No. 474) which seems to be modeled after California’s Proposition 13 passed in the late 70’s.  Some hope to pass a provision which would limit the amount that a valuation can be increased to no more than 10% each year on commercial and industrial properties.  This same provision currently exist for Texas  homeowners.

In California Proposition 13 was passed and promised to limit the amount a property tax valuation could be raised each year.  The results were as follows:

1. The concept of uniform and equal treatment between comparable property owners does not exist in California.  If the property owner does not sale their property, their valuation are limited to 2% per year.  If a property is sold the new owner is assessed at current market value and surrounding comparable properties remain at the lower value.

2. Local governments had their funding cut dramatically and made up the difference by creating user fees to make up the difference.  The goods and services that were covered by property tax funding are now supplemented with new sales and use taxes.

3. There is a transference of power from local municipalities and to the State of California.

4. Appraisal caps created reduced funding for schools, hospitals, and other special districts.

5. Numerous publications and experts the effects of Proposition 13 on California.

When a state is facing a deficit and they have the compounding effect of a Proposition 13 you create what you have in California, which is a state on the brink of a financial  disaster.

We in Texas are facing tough decisions relating to our Budget shortfall.  Do we really want to pass a California styled piece of legislation to supposedly cure our problems.  Do Texans want new sales and use taxes, a state income tax (which California has)?  Centralization of power to the State and away from local municipalities?  In my opinion the answer is no.

In: Commercial Property Tax News2