Bettencourt On Property Taxes: The Cavalry is Coming Over The Hill For Texas Homesteaders

Property taxes are one of the largest expenses homeowners face, and some Dallas County residents say rising appraisals are going to make their tax bills unbearable. 

As property valuations go up, so do the corresponding tax bills, leading more than 201,000 Dallas residents to file protests this year arguing that, for example, the appraised value is too high, they weren’t offered the proper exemptions, or their home is valued unequally with other comparable properties, according to the Dallas Central Appraisal District’s Director of Community Relations Cheryl Jordan. 

Once the home valuations are on the books, the only mitigating factor to ensure the tax bill is affordable when it arrives in the mailbox in October is the tax rate, set by school districts, county government, city government, hospitals, colleges, and special districts. 

There’s good news on that front, according to Texas Sen. Paul Bettencourt, R-Houston. 

“The cavalry is coming over the hill for the Texas homesteader, just like a John Wayne movie,” Bettencourt said. 

Based on Propositions 1 and 2, which passed in May, and what Bettencourt refers to as the “blockbuster” Senate Bill 2 and House Bill 3, recently revised to remove disaster declaration caveats, “you’re going to get tax relief this year,” the senator said. 

“I think people are going to be astonished when they get their tax bills and see what happened,” Bettencourt said. “The appraisals were so high, everybody was ready to jump off the cliff. This is going to be a very important property tax year. All our reforms have hit. As values go up, tax rates will tumble. It could be as much as a 10-penny [decrease]. The average homestead tax bills will be down year to year.” 

Residents will absolutely see a decrease in the rate assessed by local school districts, Bettencourt added. 

“That’s big news,” he said. “That’s the silver lining in this appraisal cloud. The higher relief is coming from the schools because the state is paying for it.”

Thou Doth Protest Too Much

The deadline to protest has passed, and numerous homeowners have been offered settlements. Some Appraisal Review Board hearings are still pending. Taxing jurisdictions will set the new rates in September, and tax bills typically are issued on Oct. 1. 

Dallas’s tax rate is 77.33 cents per $100 assessed valuation — one of the highest rates in the state behind Austin, Houston, and San Antonio.

Dallas County’s property tax rate is 22.79 cents per $100 assessed valuation; Collin County’s property tax rate is 19.22 cents per $100 assessed valuation; Denton County’s is 23.30 cents per $100 assessed valuation, and Tarrant County’s rate is 21.35 cents per $100 assessed valuation. 

Taxes on a $500,000 home in Dallas are about $9,200. The tax rate dropped from 77.63 cents per $100 assessed valuation in the 2021 fiscal year. 

While homestead exemptions of about $115,500 are available for residents over 65, tax bills are still causing residents to question whether they can afford their homes. 

“If you own your home, you pay a percentage of what your home is worth in property taxes, based on a rate set by City Council,” according to information published on the city website. “If you rent your home, the landlord probably includes that amount in your rent payment. In Dallas, only about 30 percent of all money from property taxes is used to pay for city services. The rest of the money goes to other organizations, like the school district, community colleges, or hospitals, to pay for the services they offer. Of the money that does go to the City, about three-fourths is used for general fund services, and about one-fourth is used to pay back money we’ve borrowed for projects like building recreation centers or libraries. Just like with a car loan or a credit card, the city uses debt to spread the cost of large projects over several years, instead of paying 100 percent up front.”

Dallas City Council 

Council members expressed interest in lowering the overall city tax rate during a June 8 meeting during which a tax exemption increase for senior citizens and people with disabilities was unanimously approved. The measure allows senior citizens an 8 percent increase in the amount they can slash their tax bill, from $107,000 to $115,500.  

Councilwoman Cara Mendelsohn, chair of the government performance and financial management committee said the city budget process, which will start next month, is the best chance to make a significant reduction in property taxes for all residents. She commended the panel for approving the increase in senior tax exemptions. 

“High property taxes can make it difficult for anyone, but there’s a recognition that seniors and people with disabilities, many who are on a fixed income, are unable to absorb into their budget the property value increases we’re seeing in Dallas,” Mendelsohn said. “This exemption increase, which will mean a reduction in their property tax, can mean the difference between being able to afford groceries or prescription medication.” 

Last year, the city council changed financial management performance criteria to require an annual look at this particular exemption rate and assess if it should be increased. 

“We didn’t just look at the increase in property value, but also considered if cost-of-living increases should be a basis for an increase in the exemption,” Mendelsohn said. “It’s my hope that the council will support … the mayor’s directive to the committee to look at ways to lower the tax burden and make Dallas more competitive with surrounding cities.”

The District 12 councilwoman alluded to an effort to reduce property tax bills for all Dallas residents when the matter comes before the governing body later this summer. 

“I hope this is just our first step and our council will take the next steps in August and September to significantly reduce the tax rate for all Dallas residents,” she said. “This will be an important way we keep rents affordable, keep people on the margin housed, and encourage people to choose Dallas as their place to live.”

The upcoming budget will remain elevated by American Rescue Plan Act funds, Mendelsohn added. Reducing the tax rate would erase the financial pain of residents and set the city on a course to innovate and re-imagine efficiency, she said. 

Several council members at the June 8 meeting spoke about the importance of providing tax relief. 

“We at the city council have the ability and we have, in my opinion, the fiduciary responsibility to protect our most vulnerable citizens, because we’re the only ones who can do it in a lot of situations,” said District 1 Councilman Chad West, who called tax raises unjustified and harsh. “As DCAD continues to aggressively raise our property taxes across the city, we as a city need to do everything we can to protect our most vulnerable neighbors, and that certainly includes our seniors.”

District 14 Councilman Paul Ridley also supported the tax break for seniors and said he hoped that initiative would extend to the discussion of setting tax rates in the fall. 

“The unprecedented increase in appraised values of everyone’s real estate over 20 percent just in the last year creates a burden on everyone,” Ridley said.

How Much Are My Taxes?

Steve Levine owns a home on Glenwood Avenue with an appraised value of about $1.7 million. Following an online protest hearing, Levine negotiated that number down to about $1.65 million. 

“That’s fine; my whole thing is not fighting my assessment,” Levine said. “It seems like the county and the city need to be letting people know what their tax bills are going to be. [Residents are] going to get a tax bill in October and not everyone is going to be able to pay it. The people at DCAD are very gracious, but DCAD doesn’t set the tax rate.” 

In the Northern Hills neighborhood, the 64 single-family homes are about 20 percent new construction and 20 percent are about 100 years old. The remaining homes have effectively been rebuilt. A comparable home two lots away from Levine’s was assessed at $1.3 million. 

“It’s difficult for appraisers to assess” because construction throughout the neighborhood is not identical, Levine explained. 

The value is calculated at about $105 per square foot of land, even though the homes are not created equal, he added. Based on the legislation passed in 2019 and recently revised by Bettencourt and others, a taxing entity must get approval from voters if they want to raise the property tax they collect from all property owners by 3.5 percent or more than the previous year. 

Bettencourt said the taxing entities could ask for that voter approval in the form of a bond issue, but those can be difficult to pass as residents already are trying to find ways to make ends meet. 

“For county and city tax rolls, as values go up, it forces the rates down to get tax relief,” Bettencourt explained. “The combination of [SB2 and HB3] has already saved taxpayers $6 billion. The values going up aren’t as critical anymore because if your value goes up, it’s offset by tax bill reductions.”

Levine said he’s concerned about homeowners who will get their bills in October and may be blindsided by the figure they owe, particularly those working with a loan institution. 

“For someone who pays their taxes monthly with their house payment, they need to know what the rate is going to be,” he said. 

Residents can look up information about their home valuation at DallasCAD.org. 

What’s Next

Tax expert Patrick Melton at Texas Tax Protests has produced numerous case studies showing residents how they can negotiate a lower tax bill. 

“In Texas, home prices have increased at unprecedented rates due to factors such as low inventory, supply chain shortages, and an influx of out-of-state residents moving to Texas,” said Nicole Griffeth, lead marketing strategist for Texas Tax Protest. “If you don’t protest, your assessed value will continue to increase year after year until it catches up to your market value. The coming 2023 property tax protest season will be one of the most important times to appeal in the last decade.” 

But even though hundreds of thousands have gone the protest route, the Dallas City Council expects it will still hear from residents seeking relief when budget hearings ramp up next month. 

“As we move forward, it’s going to be very important that we educate our communities on taxes and how they are utilized in this city,” said District 4 Councilwoman Carolyn King Arnold in the June 8 council meeting. “I know no one wants to pay taxes, but we do know there are two things certain in life, and that’s taxes and death. We’re going to have to pay some taxes to create the services. As we talk about the budget, then we will have the conversation around reduction in taxes and tax rates, but we also need to educate, so as we take a stand on certain positions, understand that a reduction in taxes sometimes also means a reduction in services. We need to be very targeted and intentional as we craft the budget based on equity, that those who are underserved are not hit harder. We’re going to continue to fight for our seniors and for [all] citizens as well.”