Lower Rate, Higher Bill: Houston Approves Property Tax Changes

Perhaps this is an example of what George H.W. Bush once famously called "voodoo economics." The Houston City Council has approved a new property tax plan that actually lowers the rate, but will increase bills. Under the plan, passed by a 13-4 vote of the council on Wednesday, the property tax rate is being reduced by a fraction of a cent, while property values have risen.

Therein lies the sleight of hand. "There's a very small decrease, but it's effectively the same tax rate as the prior year," says James Quintero, analyst at the Texas Public Policy Foundation. "Why that amounts to a tax increase is because property values are increasing."

"When you keep the rate the same, and (property) values increase, your tax bill will naturally go up," explains Quintero.

Texas lawmakers tried to prevent this sort of tax hike last year when they passed Senate Bill 2, which limits any local property tax increase to 3.5% unless it is approved by a public vote. But lawmakers are already using the pandemic to exploit loopholes in that law.

Nevertheless, the Houston tax hike is technically under the 3.5% threshold, although property values are up more than 4 percent. "It's tantamount to a 3 percent tax increase, that is going to cost the average homeowner about $42 more per year," says Quintero. "So ultimately, people are going to pay more out of their pockets."

Council members Greg Travis, Michael Kubosh, Mike Knox and Amy Peck all voted against the plan.

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