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Bill White tax rate


 

Bill White lowered taxes 5 times – television commercial

True, and misleading

Story

Recently, Bill White, the former mayor of Houston, Texas, and currently the Democratic candidate for Governor of the State of Texas in the November 2010 election, ran a television commercial seen in the Dallas/Ft. Worth market that stated that (in paraphrase) "As mayor, Bill White lowered taxes 5 times".  

Mr. White’s campaign website has a similar, if less precise, story:

"As mayor of the nation's fourth largest city he tackled tough problems, improved public safety and balanced the budget -- all while consistently lowering tax rates [emphasis ours] and increasing homestead exemptions for seniors and disabled residents."

Background

As RumorCheck has had several occasions recently to note (Tax Rate Increase, Second Highest Debt Ratio, Tax Rate Confusion), the amount of property tax that a homeowner or business has to pay is based on three items:

  • Property tax rate
  • Appraised value
  • Exemptions (or abatements)

In mathematical terms, your property tax is

Actual tax = tax rate * (appraised value - exemptions)

For most people, the exemptions stay the same from year to year, so in most cases, the actual tax owed is a function of the tax rate and the appraisal. If either item increases, then the actual tax due increases.

Houston, like much of Texas, has enjoyed healthy real estate values, even during the downturns in the economy. Between the increase in property values in most years and the addition of new property to be taxed each year, if the tax rate stayed the same every year, the city government would normally collect more tax money anyway – remember the equation above: if either the tax rate or the appraised value increases, your actual taxes increase.

Sometimes it happens that the property appraisals increased so rapidly that municipal authorities are forced to sharply cut the tax rate in order to avoid collecting too much tax money – certainly more than the voting public would stand for. University Park in Dallas County is an excellent case. As RumorCheck documented at Tax Rate Increase under "The Tax Rate Versus Your Actual Tax Bill", the tax rate for University Park dropped by nearly 40% in the last decade. Does this mean that taxes dropped 40% during that same period? Absolutely not! Actual taxes paid went up 56% over that same period. How did this happen? Easy, the appraisal values of property in University Park increased by more than 130% over that same decade. See the RumorCheck story at "Tax Rate Increase" for the full story.

As an example, the City of Houston's 2005 CAFR (Comprehensive Financial Annual Report) states on page 7:

"The City’s property tax rate was lowered by $.005 to $0.65 per $100 assessed value. Property tax revenue increased by $19 million because of the City’s rising property values [emphasis ours] and continued effort in the collection of delinquent taxes." 

As we see on page 6 (the previous page) of the CAFR, property tax revenue increased from $646,000,000 to $665,000,000 from 2004 to 2005, despite the cut in the tax rate.

We invite the reader to review the other CAFRs that are available online at the City’s website for similar situations; indeed, this environment of failing tax rates because of rising property appraisals has happenened all over the State of Texas, wherever the real estate market is doing well.

While researching this story, we found that a fellow fact-checking website, Politifact, had written a story on this subject in May; the fact that the White campaign is still running this television commercial in August in the Dallas/Ft. Worth market is ample justification to run a new version of the story here at RumorCheck.

Summary

Bill White's campaign claims that he, while mayor of Houston, lowered the tax rate 5 times. While this is true, this isn't the same as lowering taxes, and it is likely that many homeowners actually saw their tax bills increase, due to the fact that appraisals rose faster than the tax rate fell.

Conclusion

It is a principle of selling that you cast your product in the best light without telling a lie. Certainly, political campaigning is an exercise in selling.

Bill White's campaign is telling the literal truth when it says that he lowered the tax rate 5 times as mayor, hoping that the voting audience won’t stop and realize that this doesn't mean that he lowered taxes.

Mr. White's campaign is hardly unique in making such misleading statements – probably every politician either has or would if they had the chance. It is the curse of the 30 second sound byte age that we live in that Mr. White doesn’t take the time to tell the voters what he really wanted to say: "As Mayor, when property appraisals went up, I didn’t take the opportunity to collect as much tax money as possible while keeping the tax rate the same; instead, I prudently lowered the tax rate as the property values went up, in order to keep total municipal public spending to reasonable increases."

Unfortunately, those goes the 30 seconds.


William J. ‘Bill’ McCalpin

Richardson, Texas