“My property tax in Tulsa County has gone up 300 percent in the last 20 years,” the reader wrote.
If that’s the case, he wondered, why did we need a state tax increase to fund a teacher pay raise last year? It seemed to him that big growth of local property tax money should have allowed the school districts to pay teachers plenty without any new taxes.
If teacher salaries had gone up by 300 percent in the same period, there would be no shortage of teachers in Oklahoma, he said.
“Please share this with the public,” he concluded.
OK, but, first, let’s take a closer look at things.
First, let’s have a short primer in property taxes and take a close look at that 300 percent increase.
There are four factors in your property tax bill: the taxable property value, the county assessment ratio, homestead and other exemptions and the millage. A word of explanation about each is in order.
In Oklahoma, your taxable property value isn’t the same as the value of your property. Typically, when a house sells, it goes on the books at its market value. But, unless you substantially raise the value of your home with new construction, taxable value on homestead-exempt houses can only increase from that point by 3 percent a year, and some people, including a lot of retirees, can have their taxable value frozen. Most of us are paying property taxes at a discount because our taxable property value hasn’t caught up with the actual property value.
At any rate, the first critical number in figuring your property taxes is its capped taxable value.
The next important number is the assessment ratio. Every county sets a percentage of taxable value that is subject to taxation. By law, it can be anywhere from 11 percent to 13.5 percent. In Tulsa, it’s been 11 percent for as long as anyone can remember.
Next is the homestead exemption, which is a $1,000 reduction in the number you get when you multiply the capped taxable value and the assessment ratio. Homestead exemption is available to anyone who applies for it and who lives on the property involved on Jan. 1. (If your gross household income is less than $20,000 a year, you can get a double homestead exemption, but that’s relatively few people.)
So, you take all of that: The taxable value times 11 percent less $1,000 for most resident homeowners and you multiply it by the final variable, the local millage.
The local millage is your property tax rate. A mill is $1 for every $1,000. Your millage rate varies according to what school district and city you live in. In Tulsa County, it includes property tax support for county government, libraries, the Health Department, career technical schools, capital bond issues, lawsuit judgments against local government and public schools.
So, with all that in mind, let’s look at the taxes of my reader.
I was stunned by his statement that his property taxes had tripled in 20 years. He didn’t have 20 years of tax records but referred me to the county courthouse. With his cooperation, I dug out what is available of the property tax records for his home, which is in the city of Owasso and the Owasso public school district.
The Tulsa County Treasurer’s Office no longer has the record of taxes paid on the property in 1999, but the Assessor’s Office did have the records from 2000 forward. The property taxes on the reader’s home that year totaled $1,705.
Last year (which is 19 years later, not 20), the taxes were $2,655.
That’s an increase of 56 percent, not 300 percent.
The Assessor’s Office also had the 1999 assessment records for the reader’s property. The capped taxable value that year was $134,600. The assessment ratio was (and is) 11 percent. So, assuming there was a homestead exemption, the millage would have been applied to $13,806.
The county clerk’s records show that the millage for that part of Owasso in 1999 was 113.17 mills, which calculates into a total tax of $1,562. That’s a 20-year increase of 70 percent. (If my reader didn’t qualify for homestead that year, the tax would have been $1,676, a 58 percent increase over the 20-year span.)
So, the first premise — the one about his taxes tripling in 20 years — is wrong.
But let’s not stop there.
Let’s take a closer look at why the reader’s taxes increased by somewhere between 56 percent and 70 percent over 20 years.
The assessment ratio and homestead exemption were constant. The millage rate actually went down — from 113.17 in 1999 to 108.34 in 2019. What went up? The reader’s capped taxable value. Why did it go up? Because the underlying value of his property went up.
Whether he felt it or not, he got wealthier, and so his taxes increased.
County records no longer have the assessed market value for the property from 1999, but the capped taxable value was $134,600, a number that is within a few thousand dollars of the actual market value from 2000, according to county records. The current market value and the current capped taxable value are the same: $234,500. So the increase in the capped taxable value is nearly 75 percent.
But let’s not stop there.
It’s important to note that not all of that 113.17 mills that go into the tax calculation goes to the local school district.
The libraries, Health Department, career tech system and Tulsa Community College were all getting a share, as was Tulsa County itself.
The Owasso schools’ total was 66.72 mills. That includes money dedicated to buildings and bonds, which legally couldn’t be spent on teacher salaries. The amount that was actually going to the district for operating costs, including salaries, was 36.05 mills plus a share of 4 mills that goes to the county and is distributed back to districts on the basis of their average daily attendance.
The basic school millage, the 36.05 mills, is the largest single piece of the reader’s current millage but only 59 percent of the whole.
Let’s look what’s happened to that money in 20 years.
For 1999, that’s a capped taxable value of $134,600 times 11 percent less a $1,000 homestead exemption at 36.05 mills: $497.71.
How much did they get on the same property this year? $231,856 times 11 percent less $1,000 at 36.05 mills: $893.86.
That’s an increase of about 80 percent, or 4 points a year.
Now, let’s look at what has happened with Owasso Public Schools teachers in the past 20 years.
In 1999, a typical Owasso teacher — six years experience and a bachelor’s degree — earned $25,053 a year, according to numbers supplied to me by Superintendent Amy Fichtner.
In 2019, a teacher with the same experience and education would earn $41,538. That’s an increase of 65.8 percent.
I realize this is all very complex, but here’s the scorecard: My reader’s property taxes went up somewhere between 56 percent and 70 percent. The amount of taxes he was paying directly to the district for school operations went up 80 percent. Teacher pay went up 65.8 percent.
Even if the reader’s 300 percent premise wasn’t right, his underlying question is still valid: If his property taxes for school operations keep going up, why aren’t teacher salaries going up at the same rate?
They don’t go up at the same rate because the district’s operations aren’t solely funded by property taxes.
Last year, the 36.05 mills in basic mill support paid directly to the district represented 34.5 percent of the district’s general fund budget, the largest single source of funding — but not by much. State aid funding to the district represented 33.5 percent. The rest of the money comes from a variety of sources, including the federal government.
You couldn’t realistically expect teacher pay to go up by the same amount as property taxes unless all sources of school revenue went up at the same rate.
Get this: Increases in an Oklahoma school district’s property tax revenue can actually make its appropriated state aid go down.
The reason, in a word, is: equalization.
While my reader’s property value was going up, not every Oklahoman’s property value was going up at the same rate. In an attempt to equalize the amount spent on every Oklahoma child’s education, the state penalizes districts (like Owasso for most of the past 20 years) that have fast-growing property values by giving them less appropriated state aid. If your property tax money goes up fast, you pay for it in your state aid check.
Let’s take a deep breath here.
As a writer, I’m not sure how many readers made it to this point. The details of figuring out a property tax bill and how that intersects with state aid and turns into a teacher’s paycheck are pretty bewildering. It’s a blizzard of numbers coming in 60 inches of news type, and I wonder how many gave up and turned back about 30 inches ago.
But for the hearty survivors, let’s boil it all down a bit and show some understanding of my reader’s irritation.
I get where he’s coming from.
He was genuinely mistaken about how much his property taxes have gone up in 20 years, but he knew it was a lot. It was.
I pay property taxes, too, and, they never seem to go down.
Like my reader (I suspect), I pay them and think, “Well, that’s going to help the schools.”
That’s mostly right, but not completely.
And a close examination of the numbers, balanced with an understanding of how property taxes and state education funding work, make it pretty clear to this taxpayer that there isn’t any money missing ... and there isn’t any easy way to get public school funding up to a level of adequacy without some tax somewhere going up.
To use my reader’s words: Please share this with the public.
Read each part in the series Wayne Greene does the math: The Tulsa World's editorial pages editor goes after some big topics and the millions of dollars around them in this series of explanatory journalism.