A Lowes clerk brought this question up again recently while I was checking out. Other neighbors and acquaintances around Leander seem to be raising this question with increasing frequency.
There may be new Texans or first time homeowners who might benefit from a brief explanation, using the Leander ISD tax rate and a $200,000 home as an example.
Let’s say the home had an Assessed Value of $200,000 in 2015 and the LISD School Board took the Superintendent’s recommendation to set the rate at $1.51 per $100 of Assessed Value. You would owe $3,020.00 to Leander ISD via the entity collecting the taxes on LISD’s behalf.
In 2016, your home is assigned an Assessed Value of $220,000. What would be the Tax Rate that Leander ISD would use to extract the same amount of property taxes from you in 2016 as 2015?
Divide your 2015 tax bill of $3,020.00 by the 2016 Assessed Value of $220,000 (x .01). This rate of $1.37 per $100 of Assessed Value is called the 2016 Effective Tax Rate (or ETR) for your property.
But if the Leander ISD Board sets the 2016 Tax Rate at the same 2015 Tax Rate of $1.51 instead of the 2016 Effective Tax Rate of $1.37, your 2016 tax bill to LISD is $3,322.00, amounting to an increase of $302.00 over your 2015 property taxes.
It is now 2017. Your home is assigned an Assessed Value of $245,000 based on comparisons of the value of neighboring, unimproved lots and home sales, and you are unsuccessful in protesting the increase. Divide your 2016 tax bill of $3,322.00 by the 2017 Assessed Value of $245,000 (x .01). This rate of $1.36 per $100 of Assessed Value is called the 2017 Effective Tax Rate (or ETR) for your property.
Once again, the Leander ISD Board sets the 2017 Tax Rate at the same 2015 and 2016 Tax Rate of $1.51 instead of the 2017 Effective Tax Rate of $1.36, your 2017 tax bill to Leander ISD is $3,700.00, amounting to an increase of $378.00 over your 2016 property taxes or a $680.00 increase over your 2015 property taxes.
While the above scenario applies to a specific property, the principle of the Effective Tax Rate applies to the entire assessable property tax base within Leander ISD’s jurisdiction. The board members know the Effective Tax Rate each year when they begin their budget planning, but year after year, they set the same prior year’s Tax Rate. They have the power to lower the Tax Rate, but choose to allow it to rise above the Effective Tax Rate.
The Leander ISD Board congratulates itself on not raising the tax rate of $1.51 per $100 valuation for the past six years. While this is true, what they do not discuss is how setting the Tax Rate at $1.51 per $100 valuation instead of the annual Effective Tax Rate will result in Leander ISD property taxes doubling in just eight years for the property owner whose home is experiencing rapidly escalating Assessed Values.
(The Texas Public Policy Foundation produced an excellent visual on the impact of school tax rates. Even though it is addressing Austin ISD’s bond proposal, the same principles apply to Leander ISD which has a much higher debt burden.)
The Tax Rate the Leander School Board sets has two components:
- M&O (Maintenance and Operations)
- I & S (Interest and Sinking…basically debt service).
Each of these rates have their own calculations, restrictions and roll back conditions. For a more thorough explanation, see: http://www.lfcisd.net/UserFiles/Servers/Server_758/File/Finance/Truth%20in%20Taxation%20Guide.pdf
So what are your options.
Two entities impact your taxes:
- The Appraisal District which sets the assessed value of your property (in our area, it is the Williamson County Appraisal District and the Travis Central Appraisal District, depending on the location of your property). The Appraisal District is managed by an appointee.
- The various taxing entities (Leander ISD, City of Leander, Austin Community College, Williamson County, Brushy Creek WCID, and if in Travis County, it will be Travis County, Travis County Healthcare District, Travis Central Appraisal District). These taxing jurisdictions are run by elected boards, courts, and councils.
The Notice of Appraised Value is typically mailed to you from your Appraisal District in early April. You have until May 1st to file a protest if you believe the property is overvalued (for taxing purposes). You can visit the respective Appraisal District websites for information on how to file a protest).
Taxing jurisdictions set the annual property tax rate levied against your property. Taxing jurisdictions and the Appraisal District staff will typically point the finger at the other when a homeowner protests property taxes, leaving the homeowner frustrated and confused.
So what is your recourse if you are unsuccessful in protesting an assessed value in order to lower your property taxes?
- You might influence the Tax Rate by attending meetings and speaking with your school board members, city council members, and county commissioner during the spring and summer months when budgeting is taking place. Encourage them to cut the fat and focus on the essentials.
- Carefully scrutinize Bond measures and consider whether to authorize elected officials to issue more debt, obligating you to pay for it with your property taxes.
- The taxing jurisdictions are led by those you elect to the respective boards, councils and courts. Elections for the school boards and city councils are typically held the first week of May, but special election to fill vacancies can be held at other General Election dates. Consider running for office. The first day to file to run as a Candidate in the May 5, 2018 election to Leander School Board or Leander City Council is Wednesday, January 17, 2018. The filing deadline is February 16, 2018.
Your voice counts and can make a difference.
True Texans, whether newcomers or 8th generation, are passionate about the right to exercise personal responsibility. We need more of them in leadership at all levels.