East Austin's gentrification problem (Tyler, Spring: home, transfer, bankrupt)

[Novacek]

Originally Posted by tom331

That is why I support proposition 13. Your property value should not need to be appraised yearly. The price you paid for the property should be your taxable value regardless the values from other properties.

Prop 13 is a horrible, horrible mistake. It's bad for several reasons:

1. It's not equitable. Two individuals, with identical houses next door to each other (and possibly identical incomes and socio-economic statuses) can be charged vastly different amounts, just because one bought 15 years ago and one bought 5 years ago.

2. It distorts city development. You see this with some California cities. Residents are purely a cost(need to be supplied with city services), while businesses are a profit-center (because of sales taxes). So you end up with horribly gerrymandered annexations and cities that are mostly made up of commercial lots. This also preserves the voting power of the original residents, at the cost of everyone who is left in unincorporated areas and doesn't have a voice.

3. It leads to top-heavy government. Local governments have limited taxing authority, so everything has to be paid for by the state-wide sales/income taxes, filtered down to the local level through multiple levels of inefficient bureaucracy.

4. Sales and income taxes are less reliable year to year and in poorer economic times compared to property taxes. So the state ends up in huge budget crisis instead of having to do some minor belt-tightening (as in Texas).

[Ultrarunner]

Originally Posted by Novacek

Just because the land is state-owned open space, doesn't mean it (and your property) aren't actually worth that much. Or are you claiming that Republic Square downtown _isn't_ worth Millions of dollars.

The property was private... the guy defaulted on his loans when he was not able to subdivide... price paid would have been in the ball park if he could have put in the 60 homes he was trying to do.

State picked up the property for a fraction of what was owed and what the county used to hike everyone's property taxes...

My point: the county used one example to reset value for everyone in the area... and it took years before the guy realized he paid to much to make the project viable and walked away.

In the interim... it was the local property owners taking it in the shorts... with every appeal, the county cited the price paid on the single sale...

The irony is the goverment was able to pick it up for a song after putting local property owners through hell...

This simply could not have happened with a Prop 13 type of law...

[Ultrarunner]

Originally Posted by Novacek

Prop 13 is a horrible, horrible mistake. It's bad for several reasons:


1. It's not equitable. Two individuals, with identical houses next door to each other (and possibly identical incomes and socio-economic statuses) can be charged vastly different amounts, just because one bought 15 years ago and one bought 5 years ago.

Prop 13 has nothing to do with time of purchase... it is simply a property tax based on value at the time of transfer... As to legalities... the US Supreme Court has ruled Prop 13 DOES NOT violate equal protection under the law... Again... makes no difference if you bought yesterday, 5 years ago or 30 years... the same rules apply.

2. It distorts city development. You see this with some California cities. Residents are purely a cost(need to be supplied with city services), while businesses are a profit-center (because of sales taxes). So you end up with horribly gerrymandered annexations and cities that are mostly made up of commercial lots. This also preserves the voting power of the original residents, at the cost of everyone who is left in unincorporated areas and doesn't have a voice.

Prop 13 has nothing to do with city planning or zoning... as for catering to business... the Governor of Texas ran ads in California courting California business to relocate to Texas

3. It leads to top-heavy government. Local governments have limited taxing authority, so everything has to be paid for by the statewide sales/income taxes, filtered down to the local level through multiple levels of inefficient bureaucracy.

Any review of history will show Prop 13 came about in large part because of the State grab of local public school money... Serrano Decision.

Prop 13 increased several fold the efficiency of the Property Tax Collection... no longer required are armies of staff constantly adjusting assessment...

I think it is important to note that several Tax Assessors went to prison and even a suicide attributed to the sweetheart deals that were given out for favors... this ended with Prop 13.

4. Sales and income taxes are less reliable year to year and in poorer economic times compared to property taxes. So the state ends up in huge budget crisis instead of having to do some minor belt-tightening (as in Texas).

Why should the State be immune from the prosperity or lack of from its citizens?

Remember California has just about every tax imaginable... including Sales, Property and Income for the big 3...

Prop 13 does not prevent additional assessments... it only requires voter approval.

As mentioned... many of the Austin transplants I know hail from California... they think like Californians and even today, Prop 13 enjoys wide support.

I would not be the least bit surprised if Property Tax reform comes to Texas if doing nothing means people being forced from their homes... just how un American and un Patriotic is that?

[HappyTexan]

Originally Posted by Ultrarunner

I would not be the least bit surprised if Property Tax reform comes to Texas if doing nothing means people being forced from their homes... just how un American and un Patriotic is that?

The majority of Texas is not going through an RE boom like Austin is.
Eventually Austin's bubble will pop.

What is happening in Austin is not happening all over Texas so I doubt we'd see a Prop 13 being proposed here.

[Ultrarunner]

Originally Posted by HappyTexan

The majority of Texas is not going through an RE boom like Austin is.
Eventually Austin's bubble will pop.

What is happening in Austin is not happening all over Texas so I doubt we'd see a Prop 13 being proposed here.

Makes sense if the boom is localized.

It could just be the friends that I keep... seems not a week goes by without hearing something about Austin... lots of family and/or planning to locate to the area.

Makes me wonder just exactly how many residents hail from California?

[tom331]

Originally Posted by Ultrarunner

Makes sense if the boom is localized.

It could just be the friends that I keep... seems not a week goes by without hearing something about Austin... lots of family and/or planning to locate to the area.

Makes me wonder just exactly how many residents hail from California?

I have lived at Austin for more than 30 years. But, I support prop 13. There is no need of county appraisal yearly. It wastes tax payers' money. The property owners should be able to know what their budget will be when they purchase their properties. They should not be foreced out one day due to the never ending property tax increasing. I feel sorry for many at east Austin being forced out because of the high property tax.

[Ultrarunner]

Property predictability is peace of mind... and the government role is to ensure domestic tranquility... right?

It's a hard thing to face uncertainty when it comes to the roof over your family's heads.

Double digit tax increases are not sustainable... once government becomes use to ever increasing revenue... budgets balloon and it's a vicious cycle.

[scm53]

Originally Posted by Ultrarunner

Property predictability is peace of mind... and the government role is to ensure domestic tranquility... right?

It's a hard thing to face uncertainty when it comes to the roof over your family's heads.

Double digit tax increases are not sustainable... once government becomes use to ever increasing revenue... budgets balloon and it's a vicious cycle.

Theoretically, all true. The issue is, government accountability. Having lived and owned property in California when Prop 13 passed, there is no comparison to Texas. First, California has three government revenue streams - Texas, only two. Two were set by the state - money flowed to Sacramento and was distributed back to the localities, including cities and schools. In Texas, only one flows to the state - sales tax, and even then, only part as about 1/4 can be on a local option, instituted by the local voters for specific purposes. Also, only cities and special districts can enact sales taxes - not open to counties or school districts.

So the main funding source for our schools is property taxes - with some coming from the state. In any Texas tax bill, about 2/3s will be school taxes. The rates are set by the district's elected body, on appraisals set by a county wide entity. The school boards are accountable to their voters. How accountable varies. In our large metros, not much. In our smaller, usually single HS districts - VERY. I've lived in birth and understand the difference.

The problem in Austin isn't the taxing method - it is the willingness of the voters to support ever increasing spending - at all levels, for things that arguably aren't responsibilities of local government. But that's what the voters want - both in who they elect and what bonds they pass. In a perverse way, they are accountable - and the people want higher rates, so they get them.

We made the decision in Texas, years ago, to tax wealth - property tax - and not tax income. California made another choice. Given the fiscal conditions of the two states, right now, I will take our system, warts and all.

[tom331]

Originally Posted by scm53

Theoretically, all true. The issue is, government accountability. Having lived and owned property in California when Prop 13 passed, there is no comparison to Texas. First, California has three government revenue streams - Texas, only two. Two were set by the state - money flowed to Sacramento and was distributed back to the localities, including cities and schools. In Texas, only one flows to the state - sales tax, and even then, only part as about 1/4 can be on a local option, instituted by the local voters for specific purposes. Also, only cities and special districts can enact sales taxes - not open to counties or school districts.

So the main funding source for our schools is property taxes - with some coming from the state. In any Texas tax bill, about 2/3s will be school taxes. The rates are set by the district's elected body, on appraisals set by a county wide entity. The school boards are accountable to their voters. How accountable varies. In our large metros, not much. In our smaller, usually single HS districts - VERY. I've lived in birth and understand the difference.

The problem in Austin isn't the taxing method - it is the willingness of the voters to support ever increasing spending - at all levels, for things that arguably aren't responsibilities of local government. But that's what the voters want - both in who they elect and what bonds they pass. In a perverse way, they are accountable - and the people want higher rates, so they get them.

We made the decision in Texas, years ago, to tax wealth - property tax - and not tax income. California made another choice. Given the fiscal conditions of the two states, right now, I will take our system, warts and all.

Of course Texas is doing better because the government takes more tax from the property owners. The government does not generate revenue, the money is from the tax payers. I rather see a revenue "poor" government than a revenue "rich" government. In fact, California tax the rich heavier while Texas tax the poor and the middle heavier. For the rich, property is a small portion of their wealth, but for most people, real estate property is their wealth.

[HappyTexan]

Originally Posted by scm53

We made the decision in Texas, years ago, to tax wealth - property tax - and not tax income. California made another choice. Given the fiscal conditions of the two states, right now, I will take our system, warts and all.

I agree because if the local tax gets too high you have the option of moving.
When it's done at the state level you don't have that option anymore and then consider leaving the state entirely…which is what is happening in CA and other progressive states.

I do love living in Texas.
I went from a $6K property tax to a $2K property tax and was able to stay in Texas.