By Kathi Bliss
I found myself wondering on Monday how it is possible that men who have been sitting on the Commissioners Court for several years do not understand the calculation of the effective tax rate and the actual tax rate. On the one hand, I get that it’s confusing, but on the other hand, the Truth in Taxation Laws were put into effect ages ago, in an effort to keep politicians “honest.”
Yes, I understand that’s a contradiction in terms. In today’s political culture, it’s not often that the words “honest” and “politicians” collide in the same sentence. But for the sake of argument, let’s pretend like we live in a world where politicians tell the whole truth, and taxes are not the enemy.
Judge Bonn has been saying for weeks that the County has been able to lower our tax rate for the second (or third, depending upon who you ask) consecutive year. Technically, yes, that’s true. Our tax rate IS decreasing.
However, the fact that the rate is being decreased does not mean that our taxes are being decreased. In fact, the truth of the matter is, despite a lower tax rate, the County is collecting more in property taxes this year than they did last year – and they collected more last year than they did the year before.
That statement, in and of itself, is the reason the Texas Legislature has passed Truth in Taxation standards.
The habit the Legislature was attempting to break is certainly not one that’s exclusive to Caldwell County. Politicians across the state are known for telling taxpayers that tax rates are being decreased, without adding the second prong to the truth that tax collection is actually going up. Therefore, the Legislature has required taxing entities, including counties, cities and school districts, to publish public information dealing with the “effectivetax rate,” which is the rate at which taxes must be collected to equal the amount of taxes collected during the previous year.
Generally speaking, the effective rate is considerably lower than the tax rate that finally gets adopted. In Caldwell County’s specific case, the effective rate for this year was $0.6581 per $100 of valuation, versus the tax rate finally adopted, $0.6907 per $100. So although the Commissioners technically “lowered the tax rate,” they adopted a rate significantly higher than necessary to collect the same amount of taxes they took in last year. Which means, in short, they will be collecting more of our tax money than they did before.
The discrepancy between the effective tax rate and the actual tax rate can be attributed to changes in the property rolls, by the addition of new construction and taxable property, and adjustments to appraised values by the Caldwell County Appraisal District. Changes in those figures result in changes to the calculation of the tax due on the total tax roll, as well as the tax due on a case-by-case basis on individual properties.
So, a property owner could be required to pay more taxes, or less, depending on the appraised value of their property, regardless of the tax rate set by the County (or the city or the school district).
I think in a lot of cases, we make it more confusing than it has to be.
Our politicians, of course, want to tell us that they’re lowering our taxes. While it sounds pretty in campaign speeches, the fact is that in most cases, it simply isn’t true.
It’s not the politicians’ fault. A large portion of their job is making sure they keep their job, and one of the best ways to do that is to make sure that the taxpayers stay happy and keep paying the bills. So, while they’re telling us something that’s technically true (“we’ve lowered the tax rate,”) it’s our job to make sure that we understand what that really means, and what impact it actually has.
It’s our job to keep them honest.