Tax base growth varies in local cities

The city of Harlingen’s tax base increased by $5.17 million while San Benito’s tax base grew by $11.6 million from 2009 to 2010, according to Cameron Appraisal District records.

An increase in the number of disabled veterans who qualify for 100 percent property tax exemptions coupled with depressed property values contributed to Harlingen’s tax base numbers, appraisal district officials said.

Joe Orozco, the appraisal district’s Internet technology manager, said that for 2010, Harlingen has 128 veterans who are 100 percent disabled and are exempt from property taxes. Last year, there were only 28 qualifying disabled veterans in Harlingen, he said.
Chief Appraiser Frutoso Gomez said the district advertised the new law allowing the exemption in local newspapers. It took effect in 2009.

A city’s tax base is not the tax levy, but is the taxable value of all property in the city, Gomez said.

Conversely, San Benito’s total value of properties that are tax exempt decreased from $81.63 million to $71.45 million, records show.

Unlike Harlingen, there are several reasons for the change in the number of exempt properties, other than the number of disabled veterans, he said.

Contributing to San Benito’s tax base increase is that stockpiles of merchandise eligible for a “freeport exemption” dropped sharply, Gomez said.

A freeport exemption, as defined by the Texas Property Code, applies to: “Inventory … for assembling, storing, manufacturing, repair, maintenance, processing or fabricating purposes.”
When freeport exemption inventory drops, San Benito’s tax base rises, Gomez said.

If inventory remains in warehouses longer than 175 days, the company loses the freeport exemption on that inventory, Gomez said.

One San Benito business that had a large reduction in inventory with “freeport exemptions” saw a drop in value from $13.9 million in 2009 to $7.3 million in 2010, Gomez said.

Another saw a drop from $1.07 million in 2009 freeport inventory market value to $951,188 in 2010, he said.

But there are other factors that can affect the tax base of each city, Gomez said.

Because of major changes in property values, the district’s appraisals went up or down depending on property sales, he said.

“We have some subdivisions where houses were appraised at, say, $100,000 each, and we reduced them to $80,000 and other places the values went up,” Gomez said.

“The reason that many property values went down is because of a lack of home sales,” he said.

The tax base is calculated after exemptions are deducted from total market value of properties on Jan. 1, appraisal district records state.