Tax hike won’t hurt most residents

Most Olney residents who claim homestead exemptions will still see lower property tax bills in the coming year even after the Olney City Council voted to raise the local tax rate by about 43 percent, data from the Young County Appraisal District shows.

Last month, the Council voted 3-2 to invoke the “de minimis” provision of Texas law that allows small taxing entities to collect $500,000 more in revenue than in the previous fiscal year in spite of a 3.5 percent cap on year-over-year revenue increases set by the Legislature in 2020.

The Council’s proposed de minimis rate of 0.978221, or about 97 cents per $100 property valuation, will produce an expected $1.4 million in fiscal 2024, compared with last year’s rate of 0.685554, or about 68 cents per $100 property valuation for fiscal year 2023, which ended Sept. 30. A provision in state law allows small taxing entities to raise up to $500,000 in new revenue before triggering an automatic election but voters can still act to limit the increase by petitioning for a tax rate election, the Texas Taxpayers and Research Association said.

The Council’s adoption of the de minimis rate will allow the City to take advantage of a sharp drops in the state and school district tax rates for at least the next two years, to zero out deficits caused by higher fuel and to keep the City’s code clean-up and homebuilding efforts on track. Texans will vote in November whether to increase the homestead exemption to $100,000 from $40,000, a measure that is likely to pass and to provide average homeowners an average of $1,200 in tax relief for 2023, according to Gov. Greg Abbott.

Homestead owners over 65 or with a disability will see over $1,400 in savings, Gov. Abbott said in a statement.

“In some cases, (the City’s tax increase) is not going to affect many people at all,” Young County Chief Appraiser Jess Blackmon said.

Mr. Blackmon said other taxing entities in Young County are seeing deficits even as their property valuations rise by double digits because of the 2020 state law that forces them to cut tax rates while incurring inflation-fueled deficits. “The inflation rate was so high a lot of these [districts] are running in the red and [the de minimis rate] is their only option to get the books balanced again,” he said. “The de minimis rate was built just for that reason – it’s one of those free hall pass things they can do to generate money. It’s never popular when you have to raise rates but but sometimes it what needs to happen if you’re going to grow healthy.”

Mr. Blackmon ran the numbers for the City of Olney in the attached chart, which shows 2022 property tax bills by property valuation, compared with 2023 property tax bills based on the November ballot measure that increases the homestead exemption to $100,000.

The chart also shows property taxes for property owners who do not claim homestead exemptions.