City of Plano Property Tax Hikes Are Unsustainable

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Plano's Political Pit Bull
The following was written By
Mark Reid
President of Plano Citizens Coalition

City of Plano property taxes are increasing at an unsustainable rate. In the last five years, according to the city’s own data, the average homeowner has seen their city tax bill rise 36 percent, while inflation has increased only 16 percent. This is a direct result of city officials refusing to reduce their tax rate enough to offset rising property values.

Plano city leaders will argue about the tax rate. They will say that the tax rate is the same as it was ten years ago or that they lowered the tax rate two years ago, but that is irrelevant when property values are increasing faster than the tax rates are decreasing. For example, if over the last ten years your $250,000 home increases in value to $400,000, that is a 60% increase. If over that time, the tax rate stays the same, the property taxes you pay would go up 60%. If over that time, the tax rate dropped two cents per hundred dollar valuation, which is about 4%, then the property taxes you pay would go up 53%. The increase is less, but still unsustainable.

City staff has proposed yet another 4 percent tax increase again this year. And they’re using confusion to try and convince residents they aren’t. They say they are “not raising the tax rate,” implying they aren’t forcing taxpayers to pay more. But the truth is, they are.

The solution is for the Plano City Council to adopt the “Effective Tax Rate” which is the tax rate at which, on average, homeowner would pay the same amount of tax this year as they paid last year. As always, even with a lower tax rate, the city would still collect additional revenue from the city’s growth, but the tax hikes on existing homeowners would stop. This seems quite reasonable after a decade of annual tax increases.

The city will predict dire consequences if they are not allowed to continue on their tax-hiking path, but a committee of concerned Plano citizens has been studying past budgets for several months, and is now studying the proposed 2018-2019 budget. All that’s required to enable adoption of the Effective Tax Rate, and reduce the property tax rate by roughly 3 cents, is for the city to grow its budget at a slower rate than before. No spending cuts are required to lower the tax rate. If the city simply increased spending at a slower rate, they could easily lower the tax rate.

There are many areas in the budget that year after year are budgeted at levels millions of dollars more than are actually spent when the year is over. In other words, city staff will ask for millions more in each department than what they actually need. Yet, each year these line items are increased over their previous year’s budget, rather than over the previous year’s actual expenditures. Eliminating this shell game alone will allow the city to adopt the Effective Tax Rate.

Again, no spending cuts are required. Even at a lower tax rate, total tax revenue and spending will still increase. Our committee will work with any City Council member that has an interest in our findings and is willing to consider reasonable ideas to stop unsustainable spending and property tax hikes in the City of Plano.