Sunday, May 28, 2006

Governor Perry spins "tax cut" of $2.00 per month

Guv's funny tax numbers

May 28, 2006

By RICK CASEY
Houston Chronicle
Copyright 2006

Memo to the average homeowner:

Don't spend that $2,000 Gov. Perry is promising you.

If you own a television and haven't seen the political commercials in which Perry touts recently enacted school property tax cuts, you soon will.

His campaign spokesman says they'll be running in a lot of markets for a long time.

Standing in front of a pleasant, modest house (or a school in another version), the good-looking governor touts the accomplishment.

As he speaks, large print echoes his words:

"$15 billion tax cut."

"Governor Rick Perry."

"$2,000 tax cut."

That last line accompanies him saying, "The average homeowner will receive a $2,000 tax cut."

If you, like many television viewers, turn away during commercials, you'll miss the small print on screen: "Over first three years."

Playing with funny money

On a radio ad making the same claims, Perry's first line refers to a "$15 billion tax cut over three years," but a bit later he doesn't mention that period when he touts the $2,000 cut for the average homeowner.

But it turns out even if you catch the three-year bit, the governor is playing with funny money.

It mainly has to do with how he values the "average homeowner's" house.

Perry chose to use the average sales price, as calculated by the Real Estate Center at Texas A&M University. That is $180,000 statewide.

But the average appraised value on which taxes are actually calculated is about $123,000 statewide.

The new tax law projects a cut of 17 cents per $100 of appraised value (not sales price) for the first year, and 50 cents in subsequent years.

The higher the value of the house, the greater the value of the tax cut.

One Coke a week

In Harris County, the average appraisal of a home is $140,578, says Guy Griscom, assistant chief appraiser for the Harris County Appraisal District. But the latest average sales price for the Houston area is $190,800.

The reason, explained Griscom, is that older houses at the low end of the price spectrum don't tend to sell. New homes, mostly priced between $200,000 and $250,000, make up a large portion of sales, he said.

"They're not building a lot of low-end housing," he said.

You can understand Gov. Perry's unfamiliarity with this notion. He doesn't get together much with people who live in the kind of houses that don't sell.

Texas Comptroller Carole Keeton Strayhorn said at a press conference the governor's numbers are nonsense. The average tax cut the first year will be just $52, or enough "to buy one more Coca-Cola out of a vending machine each week," she predicted at a press conference.

But Strayhorn is running against Perry for governor, so let's look at the figures of a non-candidate: Harris County Tax Assessor-Collector Paul Bettencourt.

He's even more pessimistic.

Bettencourt projects an average savings of a miniscule $23 next year, less than $2 a month, or about the tax increase on two packs of cigarettes.

The next year, Bettencourt predicts an average savings of another $268.

To reach these figures, Bettencourt factors in two real-world factors that Perry does not.

The first is that this year's average appraisal is up nearly 7 percent, which will eat up part of the tax savings. He figures next year's average will rise another 7 percent.

Bettencourt also expects school districts to raise their tax rates 4 cents the first year. It is a reasonable expectation.

The new law not only allows districts to enact that raise, it encourages them to do so.

Under the law, that amount of raise is not covered by "Robin Hood." Property-rich school districts can raise their rates that much without sending money off to poorer districts.

And if poorer districts raise their rates that much, the state will match the raise with state funds.

Most boards will take advantage of this provision, especially since any hike above that will require approval by the voters.

So the bottom line is this:

Only the sort of people who appear on Rick Perry's campaign contributor lists are likely to get the $2,000 he promises.

The average homeowner should listen to Bettencourt.

You can write to Rick Casey at P.O. Box 4260, Houston, TX 77210, or e-mail him at rick.casey@chron.com.

© 2006 Houston Chronicle: www.chron.com

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