Tuesday, August 13, 2013

When is a Tax Hike not a Tax Hike?

"Notice of Public Hearing on Tax Increase." That's what the City of Richardson called it, a tax increase, in a required public notice in the neighborsgo edition of The Dallas Morning News.

"Richardson’s proposed budget for 2013-14 maintains the tax rate while funding key maintenance projects and boosting staff salaries." That's what The Dallas Morning News itself said in its own story on Richardson's proposed budget.

Which is it? A tax increase or maintaining the current tax rate?

After the jump, how the State of Texas confuses residents in the name of clarity... and why.

The proposed tax rate of $0.63516 per $100 of assessed valuation is unchanged from the 2012-2013 rate. No tax hike, then. Right?

No, the city is legally required to call it a tax increase because it proposes "to increase total tax revenues from properties on the tax roll in the preceding tax year by 3.44% (percentage by which proposed tax rate exceed lower of rollback tax rate or effective tax calculated under Chapter 26, Tax Code)." All clear?

What's happening here is that property values are up. Your house is likely worth more this year than last. Recent headline: "Dallas-Fort Worth’s hot housing market hits new highs in latest local and national surveys." With appraisals up, that means you'll likely pay more in taxes even if the nominal tax rate remains the same. Tax rate remains the same; tax bill goes up. Is it a tax hike or not? Yes and no. You say to-may-to, I say to-mah-to.

The anti-tax state legislature is keen on calling it a tax hike, hence the state-mandated wording of the city's notice of a public hearing. On the other hand, the state of Texas itself has enjoyed increased sales tax revenues for 40 consecutive months, partly due to inflation. The anti-tax state legislature never suggests that's a tax hike. Shorter state legislature: when you do it, it's a tax hike. When we do it, it's a growing economy.

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