This is the busy time of the year for the taxing authorities as they develop their budget for the year 2021. Here in Rockwall County , Rockwall City, Heath, Fate, Royse City, McLendon Chisholm, the Rockwall Independent School District, and the Royse City Independent School District, all tax properties in their jurisdiction. As a result, the budgets of these organizations affect both home owners and businesses as the tax rate developed from their budget determines the property tax which must be paid by the owners.
As a very brief review, property taxes which must be paid are a result of the tax rate set by the individual authorities and the assessed value of the property. This assessed value is established each year by the Central Appraisal District (CAD) which is governed by the Comptroller of the State of Texas. The CAD, by Texas Legislative action, must assess properties based upon current market value of the property as of Jan. 1 of each current year. Once the assessed value is set by the CAD, the tax rate established by each authority is then multiplied by this value. The tax bill is then determined by adding the county, the city, and the school district totals.
This year the taxing authorities were faced with an additional issue when trying to develop their budget and associated tax rate. In March of this year, the COVID-19 pandemic hit the world full force. Up until that time, the U.S. economy was booming and real estate values were up significantly over 2019. Since the CAD is required to assess properties based on market value, this meant that as of Jan. 1, the assessed value of a property was developed without any concern for the effects of the pandemic. Then to further complicate the issue, many citizens were directly affected by the pandemic, either through illness or reduced employment opportunities.
So for any astute elected official, the task they faced was coming up with a budget that minimized the effect of their tax rate on their citizens: conservative, not expansive, economical, elimination of unneeded programs, freezing of headcount, etc.
Looking at some of the preliminary budgets and tax rates, it looks like most of the county tax authorities have done an excellent job of balancing the effects of the pandemic and the basic needs of the organization. For example, Rockwall city has reduced its tax rate from 38.799 to 37.33 cents per hundred dollars of assessed value. This is the sixth year in a row this city has been below the effective tax rate. Rockwall County has reduced their tax rate from 32.5 to 31.31 cents; about a 7.5 cent reduction over the last six years.
Unfortunately, even with these strong positive results, the individual tax payer will probably see little, if any, reduction in their tax bill. This is because of the mandate established by the Texas Legislation that properties must be assessed on market value. As long as the economy continues to be healthy and grow, we can expect property values to increase. As an example, even through we are going through a pandemic, real estate values continue to climb. (The medium price home in the county is now $301,100 but in the last month, the medium has increased to $325,000.)
While the governor, as well as our state senator and state representative, all addressed the positive work they had done to limit property tax growth, until the market value assessment is addressed, we will continue to see escalating property tax bills each year.
In all fairness, it needs to be pointed out that property tax basically replaces a state income tax which our citizens voted in perpetuity to reject in Texas. So while we all complain about our high property tax bills, none of us complain about not having any income tax. Sometimes you just have to compromise.
Jerry Hogan is a former Rockwall County judge and U.S. Army Green Beret. He can be reached at 214-394-4033.