AUSTIN — A measure meant to save Texans billions in property taxes by limiting appraisal increases died before debate even began on the House floor today.
It was a stinging defeat for Republican Gov. Rick Perry, who has pushed for appraisal caps for more than a year.
"I'm disappointed in the vote. I don't mind saying that," Perry said. "This is not going to go away."
Rep. Dwayne Bohac, R-Houston, has been trying for weeks to gather the 100 votes needed to pass his constitutional amendment to halve the amount appraisals can grow each year. Currently, tax appraisals can grow as much as 10 percent annually.
"It's a sad day for the taxpayers of the state of Texas," Bohac said.
Perry vowed to keep up a public campaign to limit what he calls property appraisal "creep." He championed a bill set to be debated Wednesday that will reduce the cap on property tax revenue increases in cities and counties.
Proponents of appraisal caps said they would safeguard property-tax reductions that are part of the school finance plans in the House and Senate. Bohac's measure had support from the Republican leadership, including House Speaker Tom Craddick, who said today he supported appraisal caps.
"We need to take the burden of unfair taxation off the homeowners' shoulders," said Rep. David Leibowitz, D-San Antonio.
Let me explain this to you. there is a thing in finance circles that is called the "rule of 72" It shows the rate at which the value of an item will double. All you do is divide 72 by the rate of increase to determine the number of years that it takes for the asset to double in value. At 10%, that means that the taxable value of homes doubles in 7.2 years -- meaning, for example, a house bought at $100,000 today will be appraised at $200,000 in 2012 -- and at $400,000 by 2020. And that aso means that the taxes increase at the same rate -- today's $2500 property tax bill is a $5000 tax bill in 2012 and $10,000 in 2020. Given the rate at which my pay increases in my district (traditionally 3% each year), my salary will not have doubled in that time -- it will take until 2029 to do so. By that time the value of the hypothetical house will have increased in value to nearly $500,000, with a tax bill of about $15,000 each year -- and that does not include the mortgage payment.
Now to be fair, the argument by the county and local politicians makes sense on the surface. They argue that the lower rate of increase will not give hem a sufficent cash flow to provide services to the public. Apparently a 3-5% increase in the budget each year (about what the average Texan seens in their paycheck each year) is not enough. What they overlook is that they do have the option of making cuts or -- in an act of candor which frightens politicians -- going to the voters for a rate increase.
Fortunately, there is still hope for some tax relief.
House lawmakers Wednesday will debate a plan by Rep. Carl Isett, R-Lubbock, to cap at 3 percent the amount of growth in tax revenue cities and counties can take in each year. Local voters could elect to reverse the increase. The measure needs only 76 votes to pass the House.
Isett said his "truth in taxation" bill is a better way to provide tax relief.
"Lower taxes drive economic activity," Isett said. "That happens every time, everywhere it's tried."
A similar revenue cap measure by Sen. Tommy Williams, R-The Woodlands, is awaiting a vote by a Senate committee. Another appraisal cap measure, authored by Sen. Kyle Janek, R-Houston, that would limit property value growth to 5 percent but allow cities and counties to opt out is pending in the Senate. Janek said he is not sure whether to proceed with his bill after today's action.
Perry remained resolved to get the tax relief he has promised.
"We're going to live to fight again," he said.
Yes, but whatever relief we get could be eaten up by higher appraisals, or overturned by simple majority vote. As it was, a minority (65 "Representatives") managed to thwart the will of the majority of 85 members of the House.
Texans -- here are the culprits who do not believe you should be permitted to vote on an Amendment to the Texas Constitution that will allow you to be able to afford to stay in your home.
Allen, R.; Alonzo; Anchia; Bailey; Blake; Burnam; Campbell; Casteel; Castro; Chavez; Chisum; Coleman; Cook, B.; Crownover; Davis, Y.; Delisi; Deshotel; Driver; Dukes; Dunnam; Edwards; Eiland; Escobar; Farabee; Flores; Frost; Geren; Giddings; Gonzales; Gonzalez Toureilles; Griggs; Guillen; Haggerty; Hardcastle; Harper-Brown; Hartnett; Hill; Hodge; Hopson; Hunter; Jones, D.; Jones, J.; Keel; King, T.; Kuempel; Laney; Luna; Madden; Martinez; Martinez Fischer; McCall; Menendez; Moreno, P.; Morrison; Mowery; Naishtat; Noriega, M.; Oliveira; Orr; Peña; Pickett; Quintanilla; Raymond; Ritter; Rodriguez; Smith, T.; Smithee; Solis; Solomons; Swinford; Thompson; Truitt; Turner; Uresti; Veasey; Villarreal; West.
Remember that during the primaries in March, 2006, and during the general election in November, 2006. They must be defeated.