The Truth-in-Taxation process was designed to better communicate how local taxing units assign tax rates to its taxpayers.
This information is published in hopes that taxpayers can better understand what, where, how and why property taxes are assessed. As each county relies entirely on property taxes to maintain their annual budgets, it is important that their constituents understand this information and be better informed when changes in property taxes are adopted.
What Is Truth in Taxation?
In 1979, the “Peveto bill” created a uniform and professional system of appraisal across the state which led to the mandating of the Truth-in-Taxation process. Once adopted into the Texas Constitution, it required local taxing units to make taxpayers aware of tax rate proposals and to allow taxpayers the opportunity to roll back or limit tax increases. 1 Property owners would now have the right to know about changes in their properties’ appraised value and would be notified of newly estimated tax valuations. 2
What is Truth-in-Taxation For?
Creating a budget and adopting a property tax rate to support that budget are major functions of a taxing unit’s governing body. This is accomplished by following truth-in-taxation requirements to ensure the public is well aware of any increases. Each form of taxing unit determines its applicable truth-in-taxation requirements.
The Truth-in-Taxation process most commonly led to three outcomes. First, it enabled taxpayers to readily see how their property is being taxed. Next, it allowed for knowledgeable participation in each taxing entity’s rate-setting process. Third, it limited excessive tax increases across the state.
How Truth-In-Taxation Works
Property tax rates are set each year by their taxing units such as cities, counties, school districts, and special districts through the local government’s annual budgeting process. In order to properly communicate changes with the public, all tax rates must be published before hand, followed by a public meeting held to adopt the new annual rates at a later date.
Property owners now get a single appraisal— based on the determination of the market value of their home by professional, licensed appraisers employed by their county’s central appraisal district. That appraisal must be used by all entities authorized to levy a tax on the property. Property owners who question the value assigned to their property, can appeal first to their appraisal district, and then to an independent appraisal review board.
If the property owner is still not satisfied, an appeal can be filed with the State Office of Administrative Hearings, provided the property is valued at more than $1 million, or file suit in district court challenging their property’s appraised value, although most tax bills may not be high enough to justify the expense of litigation.
How to Read a Truth-in-Taxation Summary
1. Adopted Tax Rate- This is the tax rate applied by the governing body of a taxing unit.
2. Maintenance and Operations Rate- The portion of the adopted tax rate which will impose the necessary amount of taxes needed to fund maintenance and operation expenditures for the coming year.
3. Debt Rate- The portion of the adopted tax rate that will impose the amount of taxes needed to fund the unit’s debt service for the coming year.
4. Effective Tax Rate- This is the tax rate that would generate the same amount of revenue in the current tax year which was generated by the adopted tax rate in the previous tax year from property that is taxable in both the current tax year and the previous tax year.
5. Effective Maintenance and Operations Rate- The tax rate that would generate the same amount of revenue for maintenance and operations in the current tax year which was generated by last year’s maintenance and operations rate from property that is taxable in both the current tax year and the previous tax year.
6. Rollback Tax Rate- This is the highest tax rate a taxing unit can adopt before requiring voter approval at an election. In the case of a taxing unit other than a school district, the voters by petition may require that a rollback election be held if the unit adopts a tax rate higher than the unit’s rollback tax rate. In the case of a school district, an election will automatically be held if the district wishes to adopt a tax rate which is higher than the district’s rollback tax rate.
Galveston County Property Tax Analysis
Over the previous five years, from 2014 to 2018, Galveston County has continued to trend downward in property tax evaluations steadily. In that time span, the county has enjoyed the second-highest reduction in property taxes within the Greater Houston area at a rate of 9.05%. From Year-to-Year (2017-18) Galveston County held the highest reduction in property taxes at 3.62% and was one of only three counties in the Greater Houston area to accomplish that feat.
Like all counties, Galveston County is funded solely through its collection of property tax. However, property owners within Galveston County will face multiple taxing units derived from City, County, ISD and special districts. Special districts may include, but are not limited to: MUDs, management districts, emergency services districts, water control improvement districts, college districts, drainage districts, county road and flood, navigation districts, and others. Therefore, total property tax rates can be understood as follows:
Total Property Tax = County Rate + City Rate + ISD Rate + Special Districts Rate
Galveston County is home to eight school districts spread throughout 12 municipalities with which each taxing unit sets their own local property tax rates.
| City/Town | Adopted Tax Rate 2018 |
|---|---|
| BAYOU VISTA CITY TEXAS | 0.4000000 |
| DICKINSON CITY TEXAS | 0.4550000 |
| FRIENDSWOOD CITY TEXAS | 0.5323900 |
| GALVESTON CITY TEXAS | 0.5610000 |
| HITCHCOCK CITY TEXAS | 0.5000000 |
| JAMAICA BEACH CITY TEXAS | 0.1971350 |
| KEMAH CITY TEXAS | 0.2028380 |
| LA MARQUE CITY TEXAS | 0.4907640 |
| LEAGUE CITY CITY TEXAS | 0.5638000 |
| SANTA FE CITY TEXAS | 0.3317000 |
| TEXAS CITY TEXAS | 0.5500000 |
| TIKI ISLAND VILLAGE TEXAS | 0.3191500 |
| School Districts | Adopted Tax Rate 2018 |
|---|---|
| DICKINSON ISD | 1.520000 |
| HITCHCOCK ISD | 1.520000 |
| TEXAS CITY ISD | 1.514900 |
| SANTA FE ISD | 1.402300 |
| CLEAR CREEK ISD | 1.400000 |
| FRIENDSWOOD ISD | 1.367000 |
| HIGH ISLAND ISD | 1.320000 |
| GALVESTON ISD | 1.155500 |
To help further explain property tax rates, the following example is a simplified version of a property appraised at $250k located in League City, TX:
| Special District | |||||
|---|---|---|---|---|---|
| County Rates | City Rates | ISD Rates | MUD | Road & Flood | Total Property Tax Rate |
| 0.531898 | 0.563800 | 1.400000 | 0.250000 | 0.002067 | 2.747765 |
Therefore:
2.747765% (Property Tax Rate) x $250,000 = $6,869.41 in Annual Taxes
Conclusion
Local county properties continue to increase in value year over year. If tax rates were to be left at the same valuation each year, annual tax rates would increase due to the rising property value. Thus, Galveston County proactively looks to lower county tax rates to off-balance rising property valuations. Doing so ensures the county remains an attractive destination for businesses and residents alike.
| County | Town | ISD | County Rate | City Rate | ISD Rate | Total Rate |
|---|---|---|---|---|---|---|
| Chambers | Baytown | Goose Creek | 0.542548 | 0.812030 | 1.431890 | 2.786468 |
| Harris | Pasadena | Pasadena (Majority) | 0.418580 | 0.615446 | 1.480000 | 2.514026 |
| La Porte | La Porte | 0.418580 | 0.710000 | 1.380000 | 2.508580 | |
| Deer Park | Deer Park | 0.418580 | 0.720000 | 1.538700 | 2.677280 | |
| Unincorporated Harris County | Goose Creek | 0.418580 | 1.431890 | 1.850470 | ||
| Galveston | Texas City | Texas City | 0.531898 | 0.550000 | 1.514900 | 2.596798 |
| Hitchcock | Hitchcock | 0.531898 | 0.500000 | 1.520000 | 2.551898 | |
| La Marque | Texas City (Majority) | 0.531898 | 0.490764 | 1.514900 | 2.537562 | |
| Galveston | Galveston | 0.531898 | 0.561000 | 1.155500 | 2.248398 | |
| Unincorporated Galveston County | Galveston (Majority) | 0.531898 | 1.155500 | 1.687398 |
In comparison to the surrounding cities and counties located close to port access, Galveston County maintains some of the lowest levels of property tax rates while offering some of the best quality of life amenities to its residents. Those include state-recognized leading school districts, diverse communities, access to seaside entertainment such as the Kemah Boardwalk, the Texas Dike, Galveston, and Pelican Beach, and much more.
The Port of Texas City offers the 15th largest port in the United States and the 4th largest within the state. It is a private port owned by the Union Pacific Railroad and the BNSF Railroad which specializes nearly exclusively handling large volumes of liquid bulk cargoes.
The Port of Galveston recently relaunched as the Wharves of Galveston and is publicly-owned by the City of Galveston. It remains the 4th largest cruise ship port in the United States and the home port for cruise lines such as Carnival and Royal Caribbean. It is also #7 in tanker calls and has seen a massive spike in windmill shipments due to surge of installations of windmill farms across the Texas panhandle. It is also worth mentioning that both ports rank at the top in terms of navigational, rail and highway assets in the state of Texas.
Galveston County is expanding as a robust repository for industry, manufacturing, logistics, warehousing, tourism, and investment through its growing commitment to its vast array of prospective enterprises. At current rates of growth, Galveston County’s property tax rate is expected to normalize by 2023 in comparison to Harrison, Montgomery and Fort Bend Counties, while still withholding the varied advantages of the Galveston County communities.