The Impact of Proposition 4 on Current Property Tax Statements

November 14, 2023 | Montgomery County, TX

by Dennis Tibbs, Republican Precinct 76 Chair

As part of the November 7 Election, statewide voters approved Proposition 4, the amendment implementing the property tax relief package passed by the Texas Legislature during the second special session. After facing major pushback from special interest groups, Texas has taken a step in the right direction with Proposition 4.

Proposition 4 Ballot Language

Proposition 4 was described on the November 7, 2023, ballot as follows:

The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the board of directors of certain appraisal districts.

This actually describes five changes in one very long sentence, separated by semicolons, so five groups of taxpayers will be affected.

Non-Homestead Tax Limit

The first portion imposes a tax limit (20%) on increases for “non-homesteads.” This might include rental property, second homes, etc.  These properties have historically been ignored in tax relief legislation. It will be in effect for just three years so we can expect to see tweaks in the near future.

Homestead Exemption Increase

The second portion will increase the exemption from $40,000 to $100,000 for all homesteads. However, the benefit of this exemption increase will not extend to most Over 65/Disabled (most of whom are “frozen”) because of the way the exemptions are implemented. For most taxpayers it will be very beneficial and straightforward. It simply means that an additional $60,000 of appraised value will not be taxed. If the school tax rate is $1.00/$100 the reduction is simply $600 times $1.00/$100 equals to a $600 reduction on the 2023 taxes.

Over 65/Disabled Taxpayers

The third portion applies only to the Over 65/Disabled taxpayers. This group has, for decades, missed out on tax reduction legislation. The Texas legislature has passed legislation reducing tax rates and/or increasing exemptions at least six times since 1996, none of which, initially, benefited the Over 65/Disabled citizens. In most cases the legislature did provide a (delayed) adjustment to correct the oversight. The exemption increase from $25,000 to $40,000 (2021) has not been addressed but is included in Proposition 4.

As a result of the 2021 exemption increase most homesteads saw a savings of almost $200 ($40,000-$25,000 times the 2021 school tax rate of roughly $1.25/$100).  Because there was no “re-freeze” legislation, most Over 65/Disabled saw Zero reduction!  As a result of Proposition 4, the Over 65/Disabled should receive the 2021 savings plus an additional reduction near $750 (the additional $60,000 reduction times the 2023 school tax rate of potentially $1.25/$100). In addition, many will also see the reduction from the 2019 legislation (temporarily) compressing school tax rates from 2018 to the present (and beyond). This combination of reductions may result in savings of $2000 or more for some (actually more than anticipated).

Constitutional Spending Limits

The fourth portion of Proposition 4 essentially allows the legislature to “break” the constitutional spending limits that would result from these measures which are over the budget. That’s why this is a Constitutional Amendment!

Appraisal Board Elections

The final section simply specifies a term of office for some large county appraisal board members.  This would allow counties with populations over 75,000 to increase their terms from 2 years to 4 years.

Proposition 4 Was an Uphill Battle

This is a great proposition that taxpayers have been begging for. Montgomery County Senators, Paul Bettencourt and Brandon Creighton, were hugely instrumental in getting Proposition 4 passed and sent to the Governor. It was an uphill battle and the Texas House was slow to get onboard. We owe a big thank you to all those who helped, especially our Montgomery County Senators!

Montgomery County’s History of Ignoring Over 65/Disabled Taxpayers

Unfortunately, Montgomery County has not been as compassionate towards the Over 65/Disabled community. After years of being asked, the Commissioners Court did, in 2017, finally agree to a 20% Homestead Exemption. This was great news for some! Commissioner James Noack, the youngest Commissioner at the time, received a tax reduction of approximately $550. Most Over 65/Disabled received Zero reduction. This, again, is the result of the implementation that does not address the Freeze. Our legislators say they could have applied the exemption in a different way, but our Commissioners Court has never requested any assistance from the legislators!

Also, Commissioner Noack posted a March 28 news release boasting on the county’s passing of an Over 65 exemption increase (from $35,000 to $50,000). The implication/expectation is that the Over 65 taxpayers would see lower taxes. That is not the case! Most Over 65 taxpayers will see Zero tax reduction. Only those “turning 65” will receive a tax reduction because of the way the exemption is incorporated with the Freeze. Commissioners could have done it in a way that would have benefited older taxpayers but they did not!

Montgomery County Redacts Elected Officials’ Tax Records

Montgomery County has a very good tax and appraisal website which historically has provided interesting details of the tax records for ordinary taxpayers and for elected officials. However, once certain details of the elected officials’ tax records were disclosed openly, the county redacted much of the information for our elected officials. Shouldn't elected officials be subject to the same rules we are? The county claims that Texas Government Code Sec. 552.117 allows them to “hide” the electeds’ entire records, but the actual language lists limited items, like address, phone number, and social security number, as the items that are allowed to be “hidden.”  It certainly seems like the county is abusing the law by unlawfully protecting certain officials’ records.

Contact Your Legislators

The Texas Property Tax system is a punitive, socialist approach to funding the operations of our great state, but clearly Proposition 4 is the most relief we've seen in decades. Thank your legislators and encourage them to take the next step in replacing the current unfair system.