If you ask who collects property taxes in Texas, the answer is simple. It is not the State of Texas. School districts, cities, counties, and other local taxing entities collect property taxes.
But if the question is who controls the property tax system, the answer gets more complicated.
That question has been on my mind as a newspaper editor running local tax notices, and it’s back in the statewide political conversation. We talk about property taxes as though there is one tax man, and the argument becomes whether he lives at city hall or at the Capitol.
Let’s break it down.
Who Sets the Value?
Your property tax bill starts with your property’s value. Your local appraisal district determines what it is worth and certifies the values local taxing entities use when setting tax rates.
Appraisal districts operate under state law, which generally requires appraising property at market value. The state also checks local values through the Comptroller’s School District Property Value Study.
We have seen that pressure close to home. At a Stratford town hall, an appraisal district board member said local values had to rise because of the state value study. If local values stay too low for too long, the appraisal district can face a state review, and the school district can face funding consequences. That gives appraisal districts a strong reason to move values up when the state says they are too low.
When Appraisals Rise
This matters in rural communities because a growing tax base does not always mean a growing economy.
A town can show millions of dollars more in property value without adding a new business, new homes, or new jobs. The same houses and buildings are appraised at higher values. On paper, the community looks wealthier, but no new money may be moving through the local economy. Instead, growth comes from appraisals.
Those higher appraisals also mean local governments can collect more money without raising the tax rate. A city can keep the same rate and bring in more, or lower the rate and still collect more than the year before.
Who Decides What Gets Taxed?
The folks sitting in the chairs with the state seals on them down in Austin also decide through state policy what stays on the tax rolls.
Beginning this year, Texas increased the exemption for qualifying business personal property from $2,500 to $125,000. That is meaningful tax relief for many small businesses, but it also removes taxable value from local communities.
In Hansford County, appraisal district figures show the new exemption removed more than $7 million from the City of Spearman tax base and more than $18 million from the county tax base.
Texas also increased the school homestead exemption to $140,000, and state law and the Texas Education Agency heavily shape school tax rates.
So often, by the time local officials sit down to set a tax rate, the math has already changed. Property has been taken off the tax rolls, leaving a smaller tax base to support local services and making it harder to build a budget.
There Are Limits, Too
The state also imposes “caps” which limit a local government’s ability to increase property tax revenue without voter approval. For most cities and counties, that calculation generally allows about 3.5 percent more revenue for day-to-day operations.
But the cost of running a community does not always stay under 3.5 percent. Insurance, equipment, wages, fuel, streets, and water systems can all cost more. Small towns do not get a discount on a fire truck or water line just because fewer people live there.
So Who Is the Texas Tax Man?
None of this gives local officials a pass. When a city collects more property tax, the council owns that decision. When a county increases spending, commissioners should explain why.
Local conversations about taxes and spending are healthy. Voters should expect their local governments to provide the services they need and to use tax dollars wisely. Asking those questions — and holding local officials accountable for the answers — is one of the purest forms of local control.
But it is also important to understand that the State of Texas is not simply a spectator because it does not send the property tax bill. Austin sets the appraisal rules, checks local values, determines exemptions, controls much of the school tax structure, and sets the limits local governments must work within.
So who is the Texas tax man? I would argue both. Austin controls much more of the property tax system than most taxpayers realize. At the same time, local elected officials make the final decisions about budgets, tax rates, and how much property tax to collect.
If we want an honest conversation about property taxes in Texas, both sides belong in it.
Suzanne Bellsnyder is editor and publisher of the Hansford County Reporter-Statesman and Sherman County Gazette. Subscribe at TexasRuralReporter.Substack.com