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Appraisal and Revenue Caps
Effects on County Government
What is an Appraisal Cap?
• Limitation on the amount a property’s
taxable value can rise each year
• Currently, the taxable value of a home
before exemptions cannot rise by more
than 10% per year regardless of market
value
• Recent proposals would change this cap
to 3%, 5% or a local option.
Appraisal Caps
Overall Values Increased 16% CAPPED - 5%
BASE YEAR Year 2 (Current Law) Year 2
Property TV TAXES AV TV (10%) TAXES AV TV (5%) TAXES
A $ 50 $ 5.00 $ 50 $ 50 $ 4.80 $ 50 $ 50 $ 4.96
B 60 6.00 70 66 6.35 70 63 6.25
C 90 9.00 80 80 7.70 80 80 7.94
D 200 20.00 264 220 21.15 264 210 20.85
Total $ 400 $40.00 $ 464 $ 416 $40.00 $ 464 $ 403 $40.00
Taxes $ 40 $ 40 $ 40
Rate $0.10 $0.0962 $0.0993
Assumption: The taxes are levied at the effective tax rate and there is no new property.
AV - Assessed Value.
TV - Taxable Value.
Appraisal Cap Tax Shift
% Winners
change 10% Cap 5% Cap &
Property in value Year 1 Year 2 Year 2 Losers
A (50) 0% $ 5.00 $ 4.80 $ 4.96 $ 0.16
B (70) 16.67% 6.00 6.35 6.25 (0.10)
C (80) -11.11% 9.00 7.70 7.94 0.24
D (264) 32% 20.00 21.15 20.85 (0.30)
$ 40.00 $ 40.00 $ 40.00 $ -
E (264) NEW 26.21 5.36
E will pay 25.71% MORE taxes than D!!!
What is a Revenue Cap?
• Limit on the amount of additional tax
revenue that can be raised.
• Currently counties have an 8% cap –
exceeding the cap can trigger a rollback
election. Expensive!
• Recent proposals would change this cap
to a population growth plus inflation factor,
3%, or 5%.
Population Growth + Inflation
Why is the formula flawed?
• No existing measure of inflation (CPI, PPI)
correctly captures the growth in the cost of the
kinds of services county governments provide.
• Population growth does not reflect the growth in
the subpopulations county governments serve.
• County government does not control the
demand for services.
• Counties cannot adapt to state or federal
mandates without flexibility to generate revenue.
% Growth in Costs vs. Inflation and
Population
Travis County
FY1994 to FY2005
Population (County) 37.2%
Inflation 31.8%
Fuel Expenditures 180.8%
Sheriff's Office Medical Care 52.4%
Indigent Attorney Fees 111.1%
Employee Health Insurance 429.2%
Juvenile Medical 515.3%
Emergency Medical Services 709.7%
0% 100% 200% 300% 400% 500% 600% 700% 800%
% Growth in Costs vs. Inflation and
Population
Denton County
FY1995 to FY2005
Population (County) 66.5%
Inflation 28.1%
Juvenile Probation/Detention 495.4%
Debt Service 348.2%
Repairs and Maintenance 73.9%
Utilities 136.6%
County Jail (does not include Jail Health) 126.8%
Emergency Medical Services 68.6%
Juvenile Medical Expense 92.4%
Employee Health Insurance 317.2%
Indigent Attorney Fees 234.6%
Sheriff's Dept Medical Care (Jail Health) 168.4%
Fuel Costs 123.6%
0% 100% 200% 300% 400% 500% 600%
Growth in County Fuel Costs
FY2004 - FY2006
$30
$28.4M
Millions
Average increase from
FY2004 to FY2006. $24.6M
$25 County Total: 38%
Law Enforcement: 33%
$19.7M
$20 $16.4
$13.8 If additional funds
needed
$15 $10.8 in FY2006, will
take from reserves
or other services.
$10
$10.9 $12.0
$5 $8.9
$0
2004 2005 2006
Data from 51 counties reporting expenditures from all three fiscal years.
Law Enforcement County
Statewide Property Taxes
2005
Special Purpose
Districts
11%
Counties
14%
School Districts
Cities 60%
15%
Data Source: Texas Comptroller of Public Accounts
GALVESTON COUNTY, TEXAS
REVENUE BY SOURCE
FISCAL YEAR 2005 ACTUAL
Property Taxes
69.4%
Miscellaneous
1.5%
Fines, Fees and
Charges for Services
Investment Earnings Grants and 12.0%
3.4% Intergovernmental
Reimbursements
13.7%
Data Source: Texas Comptroller of Public Accounts
JASPER COUNTY, TEXAS
REVENUE BY SOURCE
FISCAL YEAR 2006 BUDGET
Property Taxes
77%
Miscellaneous
1%
Fines, Fees and
Investment Earnings Grants and Charges for Services
1% Intergovernmental 18%
Reimbursements
3%
JASPER COUNTY, TEXAS
EXPENDITURES BY SOURCE
FISCAL YEAR 2006 BUDGET
General Administration
13.2%
Infrastructure and Judicial
Environmental Services 21.6%
21.8%
Financial Administration
Community and 8.3%
Economic Development
1.1%
Health and Human Public Safety & Elections
Services Corrections 0.8%
2.0% 31.3%
3% Revenue Cap =
Revenue Loss $326,488 =
LOSS OF SERVICES
Commissioners Court must make a decision
regarding a cut in services to cover the budget
deficit. $326,488 is equivalent to the following budgets:
Historical commission
Public library
Child foster care
Senior citizens services
Healthcare unit
Sheriff patrol
Emergency management
Mandatory vs. Discretionary
(Required vs. Optional Services)
Which of the following services that county
government provides are mandatory?
A. Community and Economic Development
B. Emergency Medical Services
C. Sheriff’s Patrol
D. None of the Above
Mandatory vs. Discretionary
This side-by-side comparison is an indicator of choices a
county is required to make with available revenue.
Mandatory Discretionary
Jails Jails
Meals Quality and Quantity of
Medical Treatment Meals
Staff Level of Medical Care;
Facilities Dental Care
Access to Legal Rehabilitation Programs
Transportation Work Programs
Equipment Victim/Witness Secure
Telecommunications
Commissary
Training
Mandatory vs. Discretionary
Judicial System
Mandatory Discretionary
Courts-staff, equipment, CSCD-level of
facilities rehabilitative programs
Indigent legal services Juvenile Probation-level
Court Administration of rehabilitative programs
Clerks-record keeping
Constable-service of
process
Sheriff-service of process
Sheriff-juror & bailiff
duties
CSCD-facilities and
communication
infrastructure
Juvenile Probation
Mandatory vs. Discretionary
Public Health and Safety
Mandatory Discretionary
Indigent Medical Level of medical services
Indigent Burials Poverty level of citizens
Mental Health-jail served
Hospital (some Environmental/sanitation
circumstances) services
Sheriff-suppress crime Emergency Medical
and arrest offenders Services
Homeland Security- Level of enforcement
various offices Level of preparedness
Victim Notification Fire Marshall
Mandatory vs. Discretionary
Community Development & Other
Mandatory Discretionary
Roads (new)
Roads (current) Abatements
Sheriff-estray Parks
Retirement (existing Library
programs) Event arenas
Salary (minimum wage) Nuisance abatement
Personnel/payroll Family services
recordkeeping Elder services
Retirement (new
Worker’s Compensation employees)
Salary (position
appropriate-market)
Medical benefits
How do other states fund local
government?
Colorado County Revenues, 2002
Sales Tax Licenses &
14% Permits
Vehicle 2%
Registration Tax
4%
Intergovern-
mental
33%
Property Taxes
Fines, Fees and
& Other
Charges for
36%
Services
11%
Colorado Co. Expenditures, 2002
Community and
Miscellaneous
Economic
2%
Development
General
4%
Government
Health and Human 24%
Services
29%
Judicial
4%
Infrastructure and Public Safety and
Envirnomental Corrections
15% 22%
California Co. Revenues, 1998
Enterprise
Revenue
15% State Payments
Charges for
Services 35%
9%
Other
11%
Sales Tax
1% Property Tax Federal Payments
11% 18%
California Co. Expenditures, 1998
Debt Service
Other Municipal 3%
Services
5%
General
9%
Health and Social
Services
Public Protection
53%
30%
County Innovation
Improving Efficiencies for Service Delivery
• Yoakum County
Hospital
• Harris County
Criminal Collections
• Swisher County
Networking
• Tarrant County
Equipment Program
Conclusion
• Appraisal caps shift property tax burdens.
• Revenue caps affect counties’ ability to afford
goods and services.
• Counties are limited in how they raise funds.
• Counties are not in control of the mandated
duties handed down by the state and federal
government.
• Caps impact the quality of life of citizens and
employees.
• Caps affect the ability of local governments to
provide abatements and support Economic
Development.
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