If you don’t know yet, it is possible for voters to petition to reduce the tax rate in Texas. This normally happens when the increase has passed the limit stated by the law.

Tax Rate Limit

As of now, the threshold is 8%.

But after the Reformed Property Tax Code of Texas, it has now decreased to 3.5%. This is a different number from what Texas Governor Greg Abbott wants. He first supported the 2.5% threshold.

Yet, the 3.5% cap is still a great help for taxpayers. It won’t significantly lower the property tax they have to pay. But it will slow its growth, and they can ultimately save some money.

The new limit to the tax rate will take effect in 2020.

What Happens If Taxing Units Go Beyond the Threshold?

It’s not impossible for taxing units to go beyond the proposed 3.5% threshold. In fact, it’s rather common. That’s why the law was made to help the public.

Even before the Reformed Property Tax Code, voters can petition an election. This tackles the increase of property tax. Once an election is approved, the voters can vote to decrease the tax rate for the year.

This normally happens if a taxing unit charges beyond the threshold. For the new property tax code, this will happen if the tax rate is 3.5% more than the previous year’s revenue.

Two public hearings should be held before the adoption of the tax rate.

When Is an Election Valid?

A petition for an election is only valid when:

  1. It states that it is intended to require an election in the city regarding decreasing the current adopted tax rate.
  2. It is signed by at least 3% of the total voters in the city. This should be based on the most recent list of valid voters.
  3. Petition is submitted to the city council not later than the 90th day after the city adopts the tax rate.

If a city has less than 30,000 population, calculating its de minimis rate is necessary.

If the city’s adopted rate exceeds the de minimis rate, there will be an automatic election. The election takes place in November.

Meanwhile, a petition, for it to pass, should be equal to or lower than the de minimis rate but exceeds the 3.5% limit.

Approval of Petition and Election

Only the city council can approve the petition. They should determine the outcome not later than the 20th day after it has been submitted. If it’s valid, the election shall be scheduled.

During the election, the ballots will be prepared to vote against or for a certain proposition. It includes the name of the city and the current adopted tax rate to the proposed one. Once approved, the tax rate will be reduced to the voter-approved rate.

If a taxpayer has already paid their property tax with the higher tax rate, he/she should be refunded. The refund should be calculated between the amount of taxes paid and the amount due under the reduced rate.

Transparency

Under the Reformed Property Tax Code of Texas, rates and the processes involved should be transparent. It’s one of the key changes the bill is aiming for. That means the adopted rates should be published for everyone to see.

Besides that, dates for submission of petitions and elections should be posted. The same goes for appeals and hearings.

With more transparency, taxpayers will have more control over their tax rates. There will be less confusion as to how their properties were appraised. Additionally, they can take charge and help create a better way for them to pay their taxes.

 

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