Lots of us are talking about property valuations these days. And by “talking about,” of course, I mean blowing up the internet with red-faced emoji and comments demanding something be done.
The complaints seem to boil down to two issues:
- How could my property value increase so much and so quickly?
- How come commercial properties and people with super-expensive homes seem to be getting off easier than everyone else?
The Morning News did an extensive package on property value changes recently, and it’s worth pointing out that homes in every price category except those valued at between $100,000 and $249,999 increased in value between 7.51 percent and 8.9 percent — actually less than the amount overall Dallas home prices increased last year. According to the DMN, during the past six years median North Texas home prices have increased by 40%, and Dallas home prices gained 12.6 percent from last April.
So average valuations for property tax purposes have risen about 8 percent, while overall sales prices have risen about 8.5 percent — seems like we don’t have much to complain about. Right?
Now, how about the million-dollar-plus home values?
True, according to the DMN story, tax valuations of those properties increased by 7.51%, even as we keep reading stories about some of these homes selling for $10, $20 or even $100 million? So why can’t the tax people keep up with these numbers when they’re assessing values?
There’s a pretty simple reason: Those are crazy prices, not necessarily based on comparable sales or price-per-square-foot comparisons with neighboring properties. These luxury properties are simply selling, during these relatively OK economic times, for whatever a person with money bulging from his/her pockets is willing to shell out for them.
Those sales aren’t burdened by the need for an appraisal to prove-up value; these guys are paying cash for these homes or purchasing them using some other kind of financial wizardry that the rest of us don’t have access to because we don’t have the assets or cash flow to support it.
Really, though, here’s what we need to keep in mind: Property tax valuations are relatively meaningless in terms of the amount of property taxes we pay. The relevant issue is the tax rate assessed by the City of Dallas, Dallas County and the Dallas and Richardson Independent School Districts.
If each of these entities does absolutely nothing this year, each of their coffers should increase by about 10 percent over last year’s property tax revenue simply because property valuations have increased by that amount. That means that without doing anything, they’re going to have about 10 percent more property tax revenue to spend.
And here’s where the rubber meets the road in this situation: Should each of those entities automatically receive a 10 percent increase in property tax revenue? Or should they roll back their tax rates by about that amount so they receive the same amount of property tax revenue as they received in 2015, leaving all of us who own homes in Dallas county to pay essentially the same amount of property taxes as we did last year — even though the value of our homes has increased.
That’s a pretty easy call, isn’t it?
If you believe each or all of these tax entities need more tax dollars and are wisely spending the tax dollars they already have, let them have an increase.
If you believe each or all of these tax entities can’t blow our tax dollars fast enough on foolish projects and overpaid senior managers, yank their chain and cut their cash flow.
Unfortunately, there’s absolutely nothing any of us can do to impact that decision today, because most of us didn’t vote in the election for City Councils, School Board Trustees and County Commissioners, and the people who most of us didn’t vote to elect will be making that decision when they set their budgets later this year.
That’s why, for the most part, we are going to get what we deserve this time around. And I will bet you an expensive tollroad through a nearby river that we’re going to be paying more in property taxes than we did last year.