Austin, TX – February 2, 2009 – (RealEstateRama) – On Monday State Representative Bill Callegari (Katy) filed two measures to cap increases in property tax appraisals for commercial property. The bills, HB 979 and HJR 49, limit annual appraisal increases for commercial properties to ten percent.
Unlike residential homestead appraisals, which are capped at ten percent, appraisal increases for commercial property taxes are not limited by law. In the absence of any limitation, the property tax appraisal values for Texas’ businesses can increase substantially from year to year. These increases force many businesses to pay larger property tax bills from one year to the next.
“Under today’s property tax system, business property owners may find themselves on a slippery slope towards paying more and more in property taxes,” said Representative Callegari. “I have heard from many businesses in my district who have been affected by radical jumps in their property tax appraisals.”
One business in Representative Callegari’s district reported a 67 percent tax increase over one year. In 2007 the business reported having an appraised property value of $3,372,780. One year later, that same property was appraised at $6,747,991, representing a 100 percent increase in appraisal value. Although the property owner was able to negotiate their appraisal down to $5,464,000, the property taxes increased by over 67 percent between 2007 and 2008. During that same time the owner reported loosing revenue from the previous year due to a decrease in occupancy.
“The documented fact that a business’ property taxes can increase by as much as 67 percent is alarming, particularly when that business’ revenue for that property declined at the same time,” said Representative Callegari. “Not all businesses have the financial wherewithal to sustain a massive property tax increase. Smaller businesses, particularly those with tighter margins, are hurt too easily under our property tax appraisal system.”
Representative Callegari continued, “any business that receives a higher property tax bill is faced with two options: either pass the costs onto the consumer, or absorb a loss to their investment. On a broader level, the more businesses sustain significant property tax increases, the less they will be able to contribute to the economic growth of this state. As news of our economy continues to worsen, we need policies that ensure that business revenues remain in the hands of businesses, and not in the coffers of government.”
As introduced, HB 979 and HJR 49 would limit the maximum increase in appraised value for all real property to only 10 percent above the previous year’s appraised value for that property. If approved by the Legislature, the measures would need final ratification by Texas voters in the constitutional amendment election to be held on 3 November 2009.
Earlier this session Representative Callegari filed a legislative package to lower the appraisal cap on residential homesteads. The two bills, HB 127 and HJR 21, lower the residential homestead appraisal cap from ten percent to five.
Contact:
Jeremy Mazur
(512)463.0528
