Conroe, February 14 – Montgomery County Tax Assessor-Collector Tammy McRae presented a thorough “Property Tax Exemption Analysis” to the Montgomery County Commissioners Court during the regular meeting on February 14. McRae discussed the homestead exemption under Texas Property Tax Code Section 11.13(n), which provides:
“In addition to any other exemptions provided by this section, an individual is entitled to an exemption from taxation by a taxing unit of a percentage of the appraised value of his residence homestead if the exemption is adopted by the governing body of the taxing unit before July 1 in the manner provided by law for official action by the body. If the percentage set by the taxing unit produces an exemption in a tax year of less than $5,000 when applied to a particular residence homestead, the individual is entitled to an exemption of $5,000 of the appraised value. The percentage adopted by the taxing unit may not exceed 20 percent.”
McRae noted that the Commissioners Court must set the homestead exemption before July 1 for the following fiscal year, which begins October 1. At least 100 counties provide the full 20% homestead exemption. Neighboring Fort Bend, Galveston, and Harris counties all provide the full 20% homestead exemption, according the data McRae presented from the Texas Association of Counties.
At present, the Montgomery County government has a spending explosion increasing almost at the full amount of appraisal district property valuation increases each year. The County government’s spending has grown 428% since 2000, while the population growth during that time period has only been 84%. The County has failed to achieve any economies of scale contravening fundamental principles of sound management, which have been known for hundreds of years since the economic writing of Adam Smith and more recently since the detailed statistical and historical analysis of RAND Corporation economist Fredrick T. Moore, which he presented to the American Statistical Association on December 29, 1953, under the compelling title “Economies of Scale: Some Statistical Evidence.” Rather than reducing spending growth as the population has increased, as historical and economic data would predict, the Montgomery County government’s complete management failure has produced a direct diseconomy of scale.
McRae explained that a 20% homestead exemption would likely increase the amount of money in the hands of taxpayers, as opposed to making those funds available to the spending County government, by $27.743 million per year, while a 10% homestead exemption would put half of that amount, $13.947 million per year, into the hands of citizens and their families.
The Critical Two Words of McRae’s Presentation That Doyal and the Commissioners Used to Trick the Citizens
The Tax Assessor-Collector explained to the Commissioners Court that, during less than half of Fiscal Year 2017 already over, appraisals have already increased in Montgomery County by $2,751,652,521 “to date,” a statistic which visibly excited County Judge Craig Doyal and County Commissioners Mike Meador and Charlie Riley with particular fervor. Meador and Riley preside over the Montgomery Central Appraisal District as two of its five Board of Directors members, along with former County Commissioner Ed Chance, former Woodland Township Chairman Bruce Tough, and homebuilder Tom Cox.
When discussing the actual homestead exemption later during the same meeting, neither County Judge Craig Doyal nor County Commissioner Mike Meador acknowledged that the increased appraisals, which McRae had presented, were only “to date.” That’s “to date.” Got it? “To date.” In other words, during the first four months of the 2017 Fiscal Year from October 1, 2016, through January 31, 2017, appraisals had grown by $2.75 billion, but the total growth in appraisals for the full twelve month Fiscal Year will likely be three times that amount, or $8.25 billion!
McRae offered an important projection to the Commissioners Court, “The County can expect to generate $12,841,962 in additional revenue using the current tax of $0.4667/$100 should the increase in value remain through the July 25th certification date.” Since that amount, however, only covers the first third of the Fiscal Year, the actual increased revenue projection for the full Fiscal Year will likely be approximately $38,525,886!
McRae’s presentation was excellent and helpful. Citizens should examine her numbers carefully. Here’s the critical analysis.
Current Montgomery County government budget $381,269,079 (page 28 of County Budget, per County Auditor.)
Projected increase in government tax collections $38,525,886 (3 x $12,841,962), thanks to the aggressive appraisal increase taxation method implemented by Montgomery Central Appraisal District, a division of the Montgomery County government.
20% homestead exemption would decrease government tax collections by $27.743 million per year, while a 10% homestead exemption would decrease government tax collections by $13.947 million.
Ultimately, without any spending reductions, even the full 20% homestead exemption would yield an increase in Montgomery County taxation and spending of more than $10.782 million ($38,525,886 minus $27,743,000).
Since the Commissioners Court voted only to adopt a 10% homestead exemption, that would leave them with an increase in Montgomery County taxation and spending of $24.578 million! There is no reason whatsoever that the Commissioners Court should not have adopted the full 20% homestead exemption. The County government should give the citizens that much more money in the pockets. In this era when two County Commissioners, Jim Clark and James Noack, have already called for 5% spending reductions, and the Citizens Budget Committee is working diligently towards a $60 million spending reduction for the Fiscal Year 2018 County Budget, the 20% homestead exemption should be an item that shouldn’t even cause big spenders and taxers, such as Doyal, Meador, and Riley, to break a sweat.
It appears that political activist Kelli Cook, who showed great leadership on this issue, and others have a lot more work to do.