How property taxes work in Tyler: A primer in and out of pandemic

Read Autumn's piece or listen to it on her podcast, below.

📷 Yasmeen Khalifa

When I was younger, heading north on Broadway and turning right on the Loop to reach Paluxy was a familiar route. However, as I grew older, the construction to extend Grande to Paluxy began, and soon I found  quicker detours.

Several years later, I noticed new sparks of color on the sides of the roads: Brightly decorated electric boxes with images of Tyler. Not long afterwards, I saw workers renovating the seal statue at Bergfeld Park, which was later accompanied by a new, crisp park sign.

Nowadays, I drive by the construction sites of Tyler’s two recently renamed public high schools. While these changes — and more — have been amazing additions to Tyler, my favorite improvement has been the addition of a turn lane to the frustrating intersection of Grande and Old Jacksonville.

As I began noticing these gradual changes, I started to wonder how it all happens. Who decides to do these projects? How do they get done? Who’s paying for it?

I did not know much about the public services that enhanced the community I consider myself so invested in. To better understand these questions, I took a closer look at property taxes — the money that property- owning people and businesses are required to pay towards entities that provide public services in a community. These include school districts, colleges, cities and counties. What I found was far more complex than I imagined, especially in light of COVID-19.  

When catastrophe meets government

As complex as the taxing system in America already is, adding a pandemic has significantly strained the relationship between property taxpayers and taxing entities. These property taxpayers are typically homeowners or businesses that own property while the taxing entities — school districts, counties, cities and colleges — determine how much property owners pay for taxes. Homeowners and businesses pay property taxes every year, and the revenue from those taxes is used to fund budgets for the different entities, since they provide  public services in a community. Without that revenue, those entities may not have the funds to improve the community.  

Due to COVID-19, both taxpayers and taxing entities across the nation are facing tough decisions to decide how 2021 will unfold. The plight of the property taxpayer has received widespread and needed attention, as job loss statistics, forced closures, and capacity restrictions have significantly affected revenue and income due to pandemic, hitting nearly every industry.

At the same time, taxing entities will also face hardships as they may not receive the resources they need without taxpayer money next year due to the economic crisis and additional expenses caused by the pandemic. The shortfall in revenue has led to some local governments across the states to raise their property tax intake, while others have lowered their intake to provide relief to taxpayers affected by the pandemic. These decisions have left both taxpayers and taxing entities feeling financial pressure, since the decisions to change property tax affect the community at large. In Smith County, local officials are looking to provide some relief to taxpayers by lowering their property tax rate; however, not all taxing units may have the same luxury. 

A property tax primer: How they work in Smith County

Property tax revenue plays a significant role in funding for several local taxing units within a community. Here in Smith County, property tax revenue made up 62% revenue for Smith county, 31% revenue for the City of Tyler, 58.9% revenue for Tyler ISD and 28% revenue for Tyler Junior College in the 2020 fiscal year. All of these units provide a public service to citizens of the area.

In Texas, there are three main constituents that interact with each other to handle property taxes: the appraisal district, the appraisal review board (ARB), and local taxing units. 

  1. The appraisal district is located in each county and acts as a political subdivision for the State of Texas. They determine the values of properties so other entities can make a property tax rate based off of those values. For Tyler, this is the Smith County Appraisal District (SCAD). In addition to appraising properties, SCAD “[records] property configuration changes, ownership changes, state and local exemptions, [and] maintenance of ownership maps.” The appraisal district differs from the local taxing units since it solely determines property value, not property tax rates.
  2. The appraisal review board consists of citizen board members who handle disputes between property owners and appraisers. The members of the board are not employed by SCAD, so they are able to objectively review disputes. These board members are responsible for “[reviewing] appraisal records and the hearing and determination of taxpayer protests and taxing entity challenges…and [have] the power to make the necessary changes to solve problems.”  The ARB differs from the appraisal district since they do not determine values of properties, but rather handle disputes if a property owner disagrees with the value the appraisal district gave them. Additionally, the ARB differs from the local taxing units since they do not set property tax rates.
  3. Local taxing units can include cities, counties, schools and special districts. A property owner may be taxed by several taxing units depending on if they live in a certain vicinity of these entities. The specific taxing units differ from place to place, but for Tyler, some taxing units include Smith County, City of Tyler, Tyler Independent School District, and Tyler Junior College. Each of these units creates a budget that determines how much money they will spend. After the units decide how much money they need, they set tax rates to raise the revenue. Combined, the budget and tax rate determines how much property owners pay to each taxing unit.  The units do not determine property value, but rather the amount taxed on the property. The 2019-2020 property tax rates for Tyler, TX are as follows:
    1. City of Tyler – $0.2599/$100 valuation
    2. Smith County – $0.345/$100 valuation
    3. Tyler Junior College – $0.199926/$100 valuation
    4. Tyler ISD – $1.335/$100 valuation 

For every $100 a property is worth, taxpayers would pay the appropriate amount to each entity. For example, at these rates, a person who owns a $100,000 piece of property would pay approximately $2,140 a year in property taxes. Within that $2,140, the City of Tyler would collect $260, Smith County would collect $345, Tyler Junior College would collect $200 and Tyler ISD would collect $1,335, approximately. 

Property taxes throughout the year

Since these constituents rely on and interact with each other, they must follow a certain timeline throughout the year. There are four main stages of the property tax system: appraising taxable property, protesting the appraised values, adopting the tax rates and collecting the taxes.

  1. Appraising taxable property 

 On January 1 of each year, the appraisal district determines property values. These values can vary year-to-year depending on what the property is used for, market conditions and who owns the property. These factors determine whether the property is taxed, the value of the property if it is taxable, and who pays the taxes on the property. Since these values were determined before COVID-19, most financial changes will come later in 2021.  After the properties are appraised, the appraisal district processes tax exemptions until around April 30. By April or May, property owners should receive a Notice of Appraised Value from the chief appraiser if their property value has increased that year. The notice should include detailed information on the value of the property for both the current and preceding year, how the property may be taxed for the year including exemptions, and information on the ARB and how to protest. 

  1. Protesting appraised values 

If a property owner receives a Notice of Appraised Value that is not what they expected, they can choose to protest their value to the appraisal review board in order to raise or lower the amount. Oftentimes, property can be overvalued or undervalued, so protests can be useful for property owners to save or gain money. Regardless of reason, all protests are heard by the ARB, who will determine if the requests in the protest will be met. 

When choosing to protest, an owner must notify the appraisal district in writing 30 days from the date of the Notice of Appraised Value. The Notice of Protest does not have to be formal, but it must include the property owner’s name, what property they are protesting over, and expressed dissatisfaction with the value. The Smith County Appraisal Office also has formal Notices of Protests that can be submitted. Due to COVID-19, the appraisal district is not conducting face-to-face meetings, but property owners can still file online using the Online Protest System. 

On May 15, the ARB begins hearing protests from property owners. For protesters, it is important to have a convincing argument for the value of their property. Even if they may not know an exact value, protesters should have a numerical value in mind of what they think their property should actually be valued at. To support the numeric value they have chosen, protesters should have evidence lined up. Some items that could serve as evidence include photographs of the property, statements from builders or appraisers and appraisal records from similar properties. Having some evidence in place will help demonstrate an argument beyond simply wanting a different value.

  1. Adopting property tax rates 

 In August/September, after property values have been established, elected officials from the local taxing units adopt property tax rates depending on the property values that were discussed between the appraisal district, ARB, and property owners. The taxing units see the property values in their taxable vicinity and determine how much their rates will be depending on how much money they need for their budget. Since their budgets were made before COVID-19, most adjustments will be seen next year. Within Tyler, these taxing units can include Smith County, City of Tyler, Tyler Independent School District and Tyler Junior College. Other units may tax property owners as well, including hospitals, water departments, and fire departments. The budgets for the following year are typically put in place in October of the current year.

  1. Collecting the taxes 

 After the information from the appraisal district, ARB, and local taxing units is gathered, tax bills go out to property owners. Collection for these taxes begins on October 1, and the deadline for the current year is due January 31 of the following year. A delinquent tax can be placed if there is a failure to pay. For Tyler, the Smith County Tax Office collects property taxes for taxing jurisdictions in Smith County, including the City of Tyler. 

COVID-19 and property taxes

Taxing units are still heavily reliant on property tax revenue and many taxpayers are still facing difficult financial situations. With both sides needing financial relief, there are no easy answers when it comes to drawing hard lines. Both taxing units and taxpayers are dealing with income shortfalls and may not receive the resources they need for this year. However, local officials for Smith County are looking to provide some relief for taxpayers in 2021. 

In August 2020, the Smith County Commissioners Court, a group of local county officials who decide the budget for Smith County, filed the county budget for the 2021 fiscal year. This budget includes lowering the county property tax rate from 34.5 cents per $100 valuation to 33.5 cents in an effort to lessen the financial hardships of citizens in the community. Smith County Judge Nathaniel Moran says the 2021 fiscal budget is about “tightening our belt” to provide relief where the county has the means to do so. Additionally, the City of Tyler announced in a press release that their 2021 budget aims to lower their tax rate from 25.99 cents to 25.9 cents per $100 valuation to account for taxpayer’s economic hardships. In the case of the Smith County and the City of Tyler’s 2021 budget, both entities determined Tyler, TX was in a financial situation to try and relieve taxpayers next year. Since Smith County has made previous decisions to build the county’s reserve, they have enough money in reserve to give financial relief to taxpayers without jeopardizing their duties to the community. 

By seeing how property taxes are used to make the improvements I passively observed, I feel a deeper sense of community with this city and the changes being made. Beyond understanding, I now know I can be a part of those changes and seek to improve Tyler in my own way, even if I may not be a homeowner yet. Though I do not pay property taxes now, I want to be involved with how those taxes improve the area around me. How are they improving my community? Are taxes providing better schools for children to learn in, better parks and roads for people to use, better resources for people who may not have them, and better lives for those who need it? I will no longer passively observe, but actively participate.

Autumn VanBuskirk has lived in Tyler, Texas, since childhood and is currently studying English and Language and Technology at University of Texas at Tyler. For her freelance project, Autumn took a deep dive into how property taxes are administered in Tyler. Her essay and accompanying podcast demystifies this system for the rest of us and shows just how much the coronavirus pandemic has left no corner of our city untouched.      

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