Truth in taxation laws help property owners understand proposed tax increases before they're enacted, ensuring government accountability and giving citizens a voice in the taxation process.
What Is Truth in Taxation?
Truth in taxation refers to laws and procedures requiring local governments to notify property owners about proposed tax increases and hold public hearings before implementing them. These regulations aim to create transparency in the property tax system by preventing "hidden" tax increases that occur when property values rise but tax rates remain unchanged.
Truth in taxation emerged in the late 1970s and early 1980s amid nationwide property tax revolts. As property values soared, many homeowners faced dramatically higher tax bills even though tax rates remained unchanged.
This phenomenon, known as "bracket creep," caused taxpayers to be pushed into higher effective tax brackets without legislative action.
Utah pioneered truth-in-taxation legislation in 1985, establishing a model that many states subsequently adopted. The law's primary innovation was calculating a "certified tax rate" that automatically adjusted downward when property values increased, requiring explicit government action to capture additional revenue.
The process typically involves:
Calculating a "revenue-neutral rate" (the tax rate that would generate the same revenue as the previous year)
Public notification when governments intend to exceed this rate
Mandatory public hearings where taxpayers can voice concerns
Formal vote requirements for adopting rates above the revenue-neutral threshold
How Truth in Taxation Works
When property values increase across a jurisdiction, the revenue-neutral rate is calculated. This rate would generate approximately the same revenue as the previous year from properties taxed in both years.
Suppose a taxing authority wishes to adopt a rate higher than the revenue-neutral rate. In that case, it must publish notices in local newspapers or send direct mail to property owners, hold public hearings dedicated to discussing the proposed increase, and take a separate, recorded vote specifically on exceeding the revenue-neutral rate.
These requirements create procedural hurdles for tax increases and ensure that citizens have opportunities to participate in decisions that affect their tax burden.
States With Truth in Taxation Laws
Currently, 20 states across the country have implemented some form of truth-in-taxation laws, although specific state requirements and implementation vary significantly.
Florida requires local governments to mail individual Truth in Millage (TRIM) notices to all property owners when proposing to adopt a millage rate that exceeds the rolled-back rate, including the proposed tax rate, potential tax bill, and details about public hearings.
Texas implemented its laws through the Texas Property Tax Reform and Transparency Act of 2019, requiring the calculation of "no-new-revenue" and "voter-approval" rates. If a taxing entity wishes to adopt a rate exceeding the voter-approval rate, voters can petition for an election to approve or reject the increase.
Illinois approaches truth in taxation through the Property Tax Extension Limitation Law (PTELL), which requires taxing districts to publish a notice and hold a public hearing if they propose a levy that is more than 5% greater than the previous year's extension. Georgia's Property Taxpayer's Bill of Rights includes a rollback rate system where local governments must either reduce their millage rates to offset assessment increases or advertise a tax increase and hold three public hearings.
Benefits of Truth in Taxation
Benefits of Truth in Taxation
Increases transparency by simplifying property tax systems and preventing “automatic” revenue growth.
Promotes accountability by requiring elected officials to justify tax increases.
Boosts democratic governance by providing a forum for taxpayer input.
Encourages fiscal restraint by making tax increases politically costly.
Truth in Taxation Implementation Challenges
While truth in taxation provides valuable transparency, its implementation presents several challenges. Governments must balance community notification with operational efficiency, as the process requires precise calculation of revenue-neutral rates, extensive public notice preparation, and coordination of public hearings.
Public engagement varies widely, with some hearings drawing substantial citizen participation while others see minimal attendance despite significant outreach efforts. Some jurisdictions have addressed this by offering virtual participation options and varying meeting times to accommodate working schedules.
Budget timing constitutes another challenge, as revenue decisions must align with annual budget cycles while allowing sufficient time for the notification and hearing process. Many jurisdictions have adjusted their budget calendars to accommodate these requirements and ensure meaningful public input before finalizing tax rates.
Rollback Elections and Tax Caps
Several states enhance truth in taxation with "rollback election" provisions. These laws allow voters to petition for an election to "roll back" tax rates if increases exceed certain thresholds. Texas allows this when revenue growth exceeds 3.5% for cities and counties or 2.5% for school districts.
Unlike tax caps that directly limit revenue or rate growth, truth in taxation focuses on procedural transparency rather than absolute limits. Many states employ both approaches simultaneously for comprehensive tax control.
Implementation and Technology
Effective implementation involves using clear language in notices, providing context for revenue needs, offering multiple participation channels, and scheduling convenient hearings. Modern technology has transformed the process through interactive web portals, electronic notifications, live-streamed hearings, and mobile apps that track rate adoption.
Truth in taxation often forms part of broader "Taxpayer Bill of Rights" frameworks establishing protections for property owners, including rights to fair assessments, plain-language notices,property tax appeals, participation in hearings, and information about exemptions.
Need Help Navigating Property Tax Issues?
Understanding your property tax rights under truth-in-taxation laws can save you money and ensure your voice is heard in local government decisions.
If you're facing complex property tax issues or believe your rights haven't been respected, contact us to learn how Ownwell can help you lower your property taxes today.