Unexpectedly robust property tax revenues continue to fuel a projected city budget surplus, up from $8 million to $12 million in one month.
City Controller Annise Parker delivered the good news to City Council recently during the monthly financial report (MFOR) for the period ending October 31.
The projected general fund budget surplus stems almost entirely from a $7.2 million increase in Controller's Office projections for property tax revenues, prompted by yet another new estimate of taxable values from the county appraisal district (HCAD). With this increase and $25 million already incorporated from the last HCAD update, the current Controller's Office projection represents a $35 million increase over the original budget estimate. (The $35 million in new revenue yields only a $12 million "surplus" because the original budget drew down fund balance.)
"This is the first time in 10 years I remember the numbers changing this much and this often. It's always good news to have more revenue than expected, but there could be implications for our revenue caps and tax rate if this continues," Parker said.
Because of the dramatic increase, the city controller suggested that HCAD Executive Director Jim Robinson brief the Fiscal Affairs Committee on tax roll fluctuations.
Robinson cited two main reasons for the huge $1.8 billion difference between the county's certified taxable value set in the fall and the current value of almost $136.5 billion: a record 345,000 protests of a possible 1.7 million (in part prompted by new school district tax rates) and a $1 billion temporary bump.

The actual loss of value following so many protest hearings turned out to be less than projected. According to state law, the roll must be estimated and certified based on the projected value as if all protests were upheld, a very conservative number.
Robinson explained that the State Legislature also played a role in creating the temporary $1 billion blip. New legislation giving oil companies the choice of paying taxes on oil rigs in the operating county or in the headquarter's county caught companies off-guard. Some inadvertently paid in Houston. He said December updates will show a $500 million decrease as companies start paying taxes in other counties.
Despite 345,000 protests, Robinson said a state review concluded that HCAD is appraising residential property at 98% of value. The HCAD senior appraiser pointed out that most protests are prompted by tax bill increases rather than appraised value. Robinson, for one, would like to see the Legislature pass a 5% cap on annual appraised value increases.
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