Chapter 1
Focus on Taxes Statewide
In tax year 2005, 3,702 local taxing units levied almost $33.5 billion in property taxes, 8.1 percent more than in 2004.
The Texas Constitution authorizes local governments to levy property taxes. Local governments include counties, school districts, cities and special purpose districts such as junior colleges, hospitals, utilities, flood control, emergency service districts and others.
Each of the state’s 254 counties has a single appraisal district that determines the appraised value of taxable property, with the exception of Randall and Potter counties that together form one district. Appraised value is the chief appraiser’s estimate of the full market or productivity value of a property usually as of January 1. Local governments, commonly called taxing units, levy property taxes based on the property values set by the county appraisal districts. Local governments, however, set the tax rate based on their budget needs.
Table 1 shows taxing units for 2004 and 2005. It lists the number of units, the tax levy and the percent of levy per type of taxing units for each year. It also compares the percent change between 2004 and 2005 for each type of taxing unit. In 2005, property taxes increased from 6.4 to 9.0 percent by taxing unit from 2004. School property taxes—imposed by 1,029 independent school districts and representing about 60.3 percent of total property taxes—totaled about $20.2 billion in 2005. City property taxes increased to exceed $4.9 billion from 2004 to 2005. County property taxes exceeded $4.7 billion in 2005. The levy of special purpose districts rose by 7.1 percent to more than $3.6 billion from 2004 to 2005. The tax levy is the total amount of taxes imposed by a taxing unit on taxable property within its boundaries.
Table 1: Property Taxes Reported by Unit Type - 2004 and 2005
| Unit Type | Number of Units for 2004 Tax Year | Tax Levy for 2004 Tax Year | Percent Tax Levy for 2004 Tax Year | Number of Units for 2005 Tax Year | Tax Levy for 2005 Tax Year | Percent Tax Levy for 2005 Tax Year | Percent Change from 2004 Tax Year to 2005 Tax Year |
|---|---|---|---|---|---|---|---|
| School Districts | 1,031 | $18,533,964,802 | 59.8% | 1,029 | $20,194,915,813 | 60.3% | 9.0% |
| Cities | 1,034 | $4,607,757,531 | 14.9% | 1,043 | $4,901,791,597 | 14.6% | 6.4% |
| Counties | 254 | $4,462,844,074 | 14.4% | 254 | $4,772,652,208 | 14.3% | 6.9% |
| Special Purpose Districts | 1,429 | $3,369,068,834 | 10.9% | 1,376 | $3,609,629,697 | 10.8% | 7.1% |
| Total | 3,748 | $30,973,635,241 | 100.0% | 3,702 | $33,478,989,315 | 100.0% | 8.1% |
Totals may not add due to rounding.
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
Property Tax Growth
Table 2 shows the growth in property tax levies by the four major types of taxing units since 1985. Comparing tax years 1985 and 2005, the total of all taxing units' property taxes grew 273.7 percent.
Table 2: Growth of the Property Tax by Unit Type, 1985 through 2005
| Tax Year | Special Purpose District Levy | County Levy | City Levy | School Levy | Total Levy |
|---|---|---|---|---|---|
| 1985 | $1,056,802,000 | $1,427,755,000 | $1,820,345,000 | $4,663,892,000 | $8,968,794,000 |
| 1986 | $1,141,652,000 | $1,482,295,000 | $1,966,674,000 | $5,026,592,000 | $9,617,213,000 |
| 1987 | $1,176,667,000 | $1,539,953,000 | $2,028,743,000 | $5,218,820,000 | $9,964,183,000 |
| 1988 | $1,232,415,000 | $1,595,183,000 | $2,145,726,000 | $5,575,843,000 | $10,549,167,000 |
| 1989 | $1,284,165,144 | $1,715,691,860 | $2,200,415,156 | $6,072,227,279 | $11,272,499,439 |
| 1990 | $1,354,607,273 | $1,743,176,612 | $2,218,971,749 | $6,605,433,619 | $11,922,189,253 |
| 1991 | $1,459,643,501 | $1,894,013,461 | $2,303,609,801 | $7,566,042,099 | $13,223,308,862 |
| 1992 | $1,492,043,534 | $1,996,116,460 | $2,311,630,199 | $8,181,309,478 | $13,981,099,671 |
| 1993 | $1,535,769,813 | $2,176,974,573 | $2,362,404,482 | $8,681,859,148 | $14,757,008,016 |
| 1994 | $1,620,504,796 | $2,311,389,149 | $2,493,554,910 | $9,024,885,601 | $15,450,334,456 |
| 1995 | $1,628,217,607 | $2,391,961,283 | $2,596,742,540 | $9,340,994,056 | $15,957,915,486 |
| 1996 | $1,698,557,436 | $2,537,183,937 | $2,701,214,386 | $9,910,195,171 | $16,847,150,930 |
| 1997 | $1,759,622,591 | $2,658,308,076 | $2,847,081,480 | $10,394,500,372 | $17,659,512,519 |
| 1998 | $1,889,138,306 | $2,828,286,927 | $3,005,996,060 | $11,334,614,289 | $19,058,035,582 |
| 1999 | $2,041,041,011 | $2,979,279,400 | $3,247,964,177 | $12,009,923,498 | $20,278,208,086 |
| 2000 | $2,389,110,312 | $3,200,919,731 | $3,530,863,516 | $13,392,336,012 | $22,513,229,571 |
| 2001 | $2,703,512,059 | $3,566,857,130 | $3,884,829,249 | $15,155,217,587 | $25,310,416,025 |
| 2002 | $2,864,454,984 | $3,849,728,346 | $4,186,795,363 | $16,418,788,831 | $27,319,767,524 |
| 2003 | $3,092,285,295 | $4,121,758,950 | $4,415,212,819 | $17,264,153,972 | $28,893,411,036 |
| 2004 | $3,369,068,834 | $4,462,844,074 | $4,607,757,531 | $18,533,964,802 | $30,973,635,241 |
| 2005 | $3,609,629,697 | $4,772,652,082 | $4,901,791,597 | $20,194,915,813 | $33,478,989,315 |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
Property Taxes Compared to Other Taxes
When examining how large a role property taxes play compared to other state and local taxes, it is important to remember that different collection cycles exist. Table 3 shows the amount of property taxes expended compared to other taxes, such as the state sales tax, local sales tax and other state taxes. The amount shown in Table 3 and Figure A for property taxes are from the 2004 property tax levy that local governments spent in Fiscal 2005. This figure is used in order to match the other state taxes collected and spent in Fiscal 2005, ending on August 31, 2005.
Table 3: Property Taxes in Relation to other Taxes
| Type of Tax | Amount Expended | Percent of Total Tax Expenditures |
|---|---|---|
| Property Tax | $30,973,635,241 | 47.4% |
| State Sales Tax | $16,312,811,054 | 25.0% |
| Local Sales Tax | $4,473,758,886 | 6.9% |
| Other State Taxes | $13,525,466,560 | 20.7% |
| Total Taxes | $65,285,671,741 | 100.0% |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division and Comptroller's 2005 Annual Cash report.
Figure A graphically shows the expenditures of the various taxes listed in Table 3. The property tax represents the largest amount with $31 trillion, or 47.4 percent of the major four tax sources. Next comes the state sales tax at $16.3 trillion, or 25 percent; other state taxes at $13.5 trillion, or 20.7 percent; and the local sales tax at $4.5 trillion, or 6.9 percent.
Major state and local sales taxes and property taxes in 2005 totaled almost $65.3 billion. Property taxes remained the single largest type of tax at almost 47.4 percent of this total.
State sales taxes, the next largest revenue source at $16.3 billion, represented 25.0 percent of the total. When combined with other state taxes, such as motor fuels and motor vehicle taxes, the franchise tax, oil and gas severance taxes, mixed beverage and cigarette taxes and all other taxes, the state’s share of the total tax levy is about 45.7 percent. Local city and county sales taxes, along with metropolitan transit authority taxes, were 6.9 percent of the total.
Tax Rate Rollback Activity
While the Comptroller is not required to track rollback elections, the office assembles this data from information provided by county appraisal districts.
Local voters may limit adopted tax rates, if local taxing units adopt tax rates above their rollback tax rates. A rollback tax rate is the rate a taxing unit, excluding school districts, may not exceed without allowing its voters to petition for a reduced rate. A school district exceeding this rate must hold an election automatically, without the need of a petition process, to allow voters to roll back taxes.
Local voters in two of 17 school districts limited their 2005 adopted tax rate. Voters in the other 15 independent school districts ratified 2005 tax rates that exceeded rollback rates. The two school districts are Aspermont Independent School District and Phillips-Stinnett-Plemons Consolidated Independent School District. In 2004, four taxing units had to limit their tax rates after 25 elections were held to roll back their tax rates.
Except for school districts, the rollback rate provides the taxing unit with about the same amount of tax revenue it spent the previous year for day-to-day operations, plus an 8 percent increase for those operations plus sufficient funds to pay debts in the coming year. For school districts, in 2005 the extra increase is $0.06 per $100 of property value, rather than 8 percent, based on different calculation steps. House Bill 1 enacted in 2006 by the Third Called Session or the 79th Legislature revised the requirements for school district rollback elections, beginning in tax year 2006.
If a local taxing unit other than a school district adopts a tax rate above the rollback rate, local voters may petition for an election to roll back the adopted tax rate to the calculated rollback tax rate. A school district that adopts a tax rate above the rollback rate must hold a rollback election between 30 and 90 days after its board of trustees adopts the rate. No petition by citizens is required. The school district’s election differs from other types of units in that the school district asks voters to ratify the district’s adopted tax rate. If a simple majority of the votes cast in the election favors the adopted tax rate, then the adopted rate stands. If the voters disapprove the adopted rate, the school district’s rollback rate becomes the adopted tax rate.
Table 4 shows the taxing units that held roll back elections, with the election date, election results, the adopted tax rate, the rollback tax rate and the percent the adopted tax rate exceeded the district’s rollback rate. Tax rates are per $100 of value.
Table 4: 2005 School Districts Rollback Election Results
| Taxing Unit and Election Date | County | Election Results | 2005 Tax Rate | Rollback Rate | Percent Increase |
|---|---|---|---|---|---|
| Andrews ISD | Andrews | Ratified For - 944 Against - 527 | 1.65224 | 1.5633 | 6% |
| Aspermont ISD | Stonewall | Against ratification Against - 170 For - 102 | 1.4398 old rate 1.50 | 1.4398 | 4% |
| Cuero ISD | Dewitt | Ratified For - 508 Against - 458 | 1.46 | 1.27 | 15% |
| Carlisle ISD | Rusk | Ratified For - 17 Against - 8 | 1.5492 | 1.42 | 9% |
| Dawson ISD | Dawson | Ratified For - 32 Against - 8 | 1.5359 | 1.4245 | 8% |
| Grandfalls-Royalty ISD | Ward | Ratified For - 56 Against - 25 | 1.5668 | 1.3352 | 17% |
| Guthrie CISD | King | Ratified For - 92 Against - 22 | 1.41 | 1.1342 | 24% |
| La Poynor ISD | Henderson | Ratified For - 247 Against - 145 | 1.56 | 1.411 | 11% |
| Meadow ISD | Terry | Ratified For - 73 Against - 21 | 1.5625 | 1.25 | 25% |
| Phillips-Stinnett-Plemons CISD | Hutchinson | Against ratification Against - 273 For - 203 | 1.50614 old rate 1.604 | 1.50614 | 6% |
| Rankin ISD | Upton | Ratified For - 95 Against - 74 | 1.55 | 1.2987 | 19% |
| Sands ISD | Dawson | Ratified For - 47 Against - 7 | 1.50 | 1.355 | 11% |
| Smyer ISD | Hockley | Ratified For - 115 Against - 53 | 1.50 | 1.3044 | 15% |
| Sundown ISD | Hockley | Ratified For - 174 Against - 56 | 1.50 | 1.1984 | 25% |
| Trinidad ISD | Henderson | Ratified For - 79 Against - 56 | 1.6146 | 1.443 | 12% |
| Whiteface CISD | Cochran | Ratified For - 93 Against - 91 | 1.50 | 1.27 | 18% |
| Whitharral ISD | Hockley | Ratified For - 67 Against - 8 | 1.50 | 1.2489 | 20% |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
County voters are more likely to roll back taxes via an election. Since 1982, 83.3 percent of county rollback elections received voter approval (Table 5). By contrast, only slightly more than a quarter of school district rollback elections result in rejecting a school board’s adopted tax rate. Overall, voters approve nearly half of tax rollback elections.
Table 5: History of Rollback Elections That Passed, 1982 – 2005
| Tax Year | School Dis-tricts | Counties | Cities | Special Districts | Total |
|---|---|---|---|---|---|
| 1982 | 11 of 24 | 6 of 6 | 2 of 3 | 2 of 2 | 21 of 35 |
| 1983 | 2 of 4 | 4 of 4 | 0 of 1 | 0 | 6 of 9 |
| 1984 | 0 of 3 | 1 of 1 | 4 of 4 | 0 of 1 | 5 of 9 |
| 1985 | 1 of 1 | 4 of 4 | 3 of 5 | 0 | 8 of 10 |
| 1986 | 2 of 4 | 2 of 2 | 2 of 3 | 1 of 2 | 7 of 11 |
| 1987 | 2 of 9 | 1 of 1 | 3 of 7 | 3 of 5 | 9 of 22 |
| 1988 | 4 of 12 | 3 of 3 | 4 of 7 | 1 of 2 | 12 of 24 |
| 1989 | 10 of 23 | 4 of 6 | 6 of 7 | 1 of 2 | 21 of 38 |
| 1990 | 6 of 11 | 3 of 4 | 2 of 4 | 3 of 5 | 14 of 24 |
| 1991 | 1 of 1 | 2 of 2 | 2 of 4 | 1 of 1 | 6 of 8 |
| 1992 | 0 | 0 of 1 | 3 of 3 | 0 of 1 | 3 of 5 |
| 1993 | 0 of 3 | 1 of 2 | 2 of 2 | 0 | 3 of 7 |
| 1994 | 1 of 2 | 1 of 2 | 3 of 3 | 1 of 1 | 6 of 8 |
| 1995 | 0 of 2 | 0 | 1 of 4 | 0 | 1 of 6 |
| 1996 | 1 of 3 | 0 | 1 of 4 | 2 of 2 | 4 of 9 |
| 1997 | 0 | 0 | 1 of 1 | 0 | 1 of 1 |
| 1998 | 2 of 4 | 0 | 2 of 3 | 0 | 4 of 7 |
| 1999 | 3 of 11 | 0 | 0 of 1 | 0 of 1 | 3 of 13 |
| 2000 | 2 of 11 | 2 of 2 | 2 of 2 | 0 of 1 | 6 of 16 |
| 2001 | 2 of 30 | 0 of 1 | 1 of 2 | 1 of 1 | 4 of 34 |
| 2002 | 3 of 5 | 0 of 0 | 2 of 3 | 0 of 0 | 5 of 8 |
| 2003 | 0 of 4 | 1 of 1 | 1 of 1 | 0 of 1 | 2 of 7 |
| 2004 | 2 of 23 | 0 | 1 of 1 | 1 of 1 | 4 of 25 |
| 2005 | 2 of 17 | 0 | 0 | 0 | 2 of 17 |
| Total | 57 of 207 | 35 of 42 | 48 of 75 | 17 of 29 | 157 of 336 |
| Percentage | 27.5% | 83.3% | 64.0% | 58.6% | 46.7% |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
Over the last 23 years, the number of rollback elections called by voters has spiked four times, in 1982, 1990, 2001 and 2004. This is illustrated in Figure B, which lists the information from the Total column in Table 5 above. Voter approval of these elections, however, has shown a steady decline over the years.
Freeport Exemption
In 1990, school districts, counties, cities and junior college districts gained the right to choose whether to tax freeport property. Property Tax Code Section 11.251, enacted by the 1989 Texas Legislature, defines freeport property as goods held in Texas temporarily for up to 175 days for assembling, processing, manufacturing, storage or other purposes.
Texas patterned its law after the federal law on goods coming into U.S. ports and not taxed since they were “free” from a port or tax location. In 1989, the Texas Legislature enacted Tax Code Section 11.251 entitled “Tangible Personal Property Exempt”, which taxpayers and local tax officials refer to as the freeport exemption. Personal property can include privately owned automobiles, motorcycles and light trucks not used to produce income; fixtures, equipment and inventory used by a commercial or industrial business to produce income; and mobile homes on land owned by someone else. Personal property may also include privately owned aircraft, boats, travel trailers, motor homes and mobile homes on rented or leased land.
While the vast majority of school districts, counties, cities and junior college districts continue to tax freeport property, the number of these units that exempt freeport property from taxation increased by 20 taxing units to 342 units in tax year 2005. The amount of value exempted for these taxing units increased by $4.5 billion, or 12.4 percent.
Some junior college districts also exempt freeport property, but the Texas Comptroller’s Property Tax Division does not collect data from these entities for that information. State law requires other special districts, such as water districts or hospital districts, to exempt freeport property.
Table 6 identifies the total exempted value by counties, cities and school districts for the freeport exemption for 2004 and 2005. Table 7 lists the freeport taxable value loss by county, Table 8 lists the freeport loss by city and Table 9 lists the freeport value loss by school district. Table 9 also includes the South Texas ISD, which is not part of the PVS.
TABLE 6: Taxing Units that Exempt Freeport property
| Types of Taxing Units That Exempt Freeport Property | 2004 Number of Units | 2004 Taxable Value Loss | 2005 Number of Units | 2005 Taxable Value Loss |
|---|---|---|---|---|
| County | 52 | $11.6 billion | 53 | $13.6 billion |
| City | 139 | $11.6 billion | 143 | $13.5 billion |
| School District | 131 | $13.2 bil-lion | 144 | $15.4 billion |
| Total | 322 | $36.4 billion | 340 | $42.5 billion |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
Table 7: 2005 Freeport Value Loss by County
| County | Freeport Value Loss |
|---|---|
| Anderson County | $18,514,348 |
| Angelina County | 39,801,024 |
| Archer County | 692,920 |
| Bastrop County | 6,322,490 |
| Bexar County | 344,624,360 |
| Bosque County | 2,946,772 |
| Brazos County | 24,799,439 |
| Burnet County | 6,612,899 |
| Camp County | 3,250,560 |
| Coleman County | 340,350 |
| Collin County | 639,820,440 |
| Comal County | 6,663,027 |
| Dallas County | 3,173,436,032 |
| Delta County | 366,694 |
| Denton County | 1,040,351,934 |
| Eastland County | 6,656,470 |
| Ector County | 66,134,900 |
| El Paso County | 1,159,102,128 |
| Foard County | 419,380 |
| Gray County | 14,587,875 |
| Grayson County | 109,913,743 |
| Guadalupe County | 143,411,063 |
| Harrison County | 93,031,722 |
| Hidalgo County | 318,882,715 |
| Hill County | 2,150,027 |
| Hutchinson County | 16,827,270 |
| Kaufman County | 71,269,931 |
| Kendall County | 13,073,941 |
| Lamar County | 76,337,000 |
| Lubbock County | 3,129,500 |
| Maverick County | 80,781,990 |
| McLennan County | 18,988,074 |
| Milam County | 133,969,409 |
| Montgomery County | 26,554,560 |
| Palo Pinto County | 119,226,799 |
| Parker County | 13,831,290 |
| Potter County | 177,267,406 |
| Randall County | 72,884,257 |
| Rockwall County | 18,883,658 |
| Runnels County | 11,489,450 |
| Rusk County | 4,368,390 |
| Smith County | 232,161,753 |
| Tarrant County | 3,408,147,364 |
| Titus Country | 9,633,890 |
| Tom Green County | 33,808,136 |
| Travis County | 1,440,360,577 |
| Val Verde County | 34,852,776 |
| Walker County | 15,058,077 |
| Webb County | 161,114,939 |
| Wharton County | 9,755,950 |
| Wichita County | 107,796,763 |
| Wise County | 18,855,673 |
| Young County | 6,063,820 |
| Total (53 Counties) | $13,559,325,955 |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.
Tables 8 and 9 below are in PDF format. If you do not already have it, you will need to download Adobe Acrobat Reader to view and print the PDF files.
Table 8: 2005 Freeport Value Loss by City (PDF, 202 KB)
Table 9: 2005 Freeport Value Loss by School District (ISD) (PDF, 216 KB)
During the period from 1995 to 2005, the number of taxing entities granting freeport exemptions has grown from 162 to 340, or 109.9 percent (Table10). During the same span, the value loss in taxes to these taxing entities grew from $11.0 billion to $42.5 billion, or 286.4 percent.
Table 10: Taxing Units that Exempt Freeport Property, 1995 through 2005 (in Millions)
Counties
| Year | Number of Counties | Total Value Loss in Billions |
|---|---|---|
| 1995 | 32 | $4.1 |
| 1996 | 34 | $4.9 |
| 1997 | 35 | $5.5 |
| 1998 | 40 | $5.9 |
| 1999 | 40 | $6.4 |
| 2000 | 42 | $9.3 |
| 2001 | 46 | $11.7 |
| 2002 | 46 | $10.3 |
| 2003 | 49 | $10.1 |
| 2004 | 52 | $11.6 |
| 2005 | 53 | $13.6 |
Cities
| Year | Number of Cities | Total Value Loss in Billions |
|---|---|---|
| 1995 | 69 | $4.0 |
| 1996 | 69 | $4.3 |
| 1997 | 70 | $4.7 |
| 1998 | 86 | $5.4 |
| 1999 | 94 | $6.7 |
| 2000 | 101 | $8.6 |
| 2001 | 109 | $10.8 |
| 2002 | 115 | $9.6 |
| 2003 | 127 | $9.7 |
| 2004 | 139 | $11.6 |
| 2005 | 143 | $13.5 |
School Districts
| Year | Number of School District | Total Value Loss in Billions |
|---|---|---|
| 1995 | 61 | $2.9 |
| 1996 | 70 | $3.6 |
| 1997 | 69 | $4.2 |
| 1998 | 75 | $4.6 |
| 1999 | 85 | $5.9 |
| 2000 | 95 | $7.2 |
| 2001 | 106 | $10.6 |
| 2002 | 113 | $10.0 |
| 2003 | 121 | $10.8 |
| 2004 | 131 | $13.2 |
| 2005 | 144 | $15.4 |
Total for all taxing units
| Year | Total All Entities | Total Value Loss, All Entities |
|---|---|---|
| 1995 | 162 | $11.0 |
| 1996 | 173 | $12.8 |
| 1997 | 174 | $14.4 |
| 1998 | 201 | $15.9 |
| 1999 | 219 | $19.0 |
| 2000 | 238 | $25.1 |
| 2001 | 261 | $33.1 |
| 2002 | 274 | $29.9 |
| 2003 | 297 | $30.6 |
| 2004 | 322 | $36.4 |
| 2005 | 340 | $42.5 |
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.