Fevered tax base growth in McLennan County has cooled

McLennan County’s certified appraisals, the total values used by taxing entities to set their budgets and property tax rates, increased by 5% from about $27.9 billion in 2023 to $29.3 billion in 2024. 

Jim Halbert, Chief Appraiser for the McLennan Central Appraisal District, said growth of around 3% to 5% a year is typical for McLennan County over time, despite the unusually high growth in the last few years.

McLennan County saw 16% growth in certified appraisal values from 2022 to 2023. That followed a growth rate of 17% from 2021 to 2022. 

Slowing growth in tax base doesn’t necessarily increase or decrease local taxes, which are determined by local governments, Halbert said.

An individual homeowner may also see tax increases due to the delayed effect of the state property tax cap.

In addition to homestead exemptions, state law limits yearly tax increases on homesteads to 10%. However, the homeowner’s capped tax level will increase 10% yearly until it catches up with the appraised value.

“The biggest thing is growth has slowed down, but people will probably still see that increase (in their taxes) if they had a 10% increase cap from the prior year,” Halbert said.

The average taxable home value in McLennan County increased by about 10%, from $199,989 in 2023 to $220,369 in 2024.  

Despite the slowdown this year, McLennan County added $800 million of new value this year. 

New construction of single family residences grew the certified appraisal values by $396 million and multifamily residences created $30 million. New commercial and industrial properties in the county created $311 million. 

Halbert said there was significant amount of commercial and industrial growth in the area, with more expected in the next few years. 

For example, construction on a $1 billion recycled paperboard manufacturing plant is currently underway on Alliance Parkway. With production slated to ramp up in 2026, the 640,000-square-foot Graphic Packaging manufacturing facility could significantly increase McLennan County and Waco’s certified appraised values. 

The city of Waco saw a 4% increase in its certified total appraisal values, from about $15.7 billion in 2023 to $16.2 billion in 2024. The average taxable home value in Waco increased by 9.5% from $206,020 in 2023 to $225,692 in 2024.

This year’s appraisal growth rate falls far below the average rate of about 9% annual growth since 2015.  This year’s growth rate is the second lowest since 2015, only beating out the appraisal growth rate of about 1% in 2020 due to the COVID-19 pandemic. 

City Manager Bradley Ford said in an emailed statement Friday the total appraisals for the city were higher than city staff projections.

“The 2024 grand total appraisals is slightly higher than the amount projected by city staff,” Ford said. “However, legislative changes have complicated the calculation of the value used for budgetary purposes. The taxable values for budgetary purposes is $15.096 billion — less than 1% higher than the value on which the recommended budget for FY 24-25 is based.” 

Ford said the city’s budget and tax rate for for fiscal year 2025 will be finalized once the city receives the certified tax rate worksheet from the McLennan County Tax Office. 

The proposed budget for fiscal year 2025 maintains the current tax rate of 75.5 cents per $100 in valuation, which is the lowest the tax rate has been in 16 years.

Waco council members will vote to adopt a final budget Aug. 27. The approved final budget will go into effect starting Oct. 1. 

Waco Independent School District saw a decrease of 1% or $54.6 million, leaving a tax base of $8.52 billion. However, average taxable home values went up by about 14%, from $96,791 in 2023 to $110,664 in 2024. 

Halbert said Waco ISD’s decrease in certified total appraisal values is most likely due to a decrease in commercial property values in the area. He said Waco ISD’s tax base depends on commercial property more than most area school districts.

The total was likely affected by the closure of the Owens-Illinois glass plant in October. The 54-acre site was previously valued at $8.5 million, including the land and buildings, plus $74.7 million in personal property, such as equipment.

Waco ISD Superintendent Susan Kincannon said in an emailed statement Friday that the district anticipated the debt service rate to increase by one cent. 

“For school districts, state revenue makes up the difference when local revenue goes down so the district will not feel an impact on maintenance and operations revenues,” she said. “However, we anticipate a slight increase in our debt service rate. At this time, we are estimating a one-cent increase.”

Last year the district was able to decrease its maintenance and operations rate from 94.2 cents to 76.6 cents per $100 in valuation and decrease its total rate by 2.1 cents. Waco ISD and other school districts across the state were able to lower their rates because of an $18 billion property tax relief measure passed by the Texas Legislature.

Incorporating the 2021 bond program, the interest and sinking tax rate is 0.4 cents less than the district originally projected, Kincannon said. 

Midway Independent School District saw a 4% increase in its certified total appraisal values this year, from $7.5 billion in 2023 to $7.7 billion in 2024. The average taxable home value in Midway ISD increased by about 10%, from $247,320 in 2023 to $272,789 in 2024. 

Midway ISD spokesperson Emily Parks said in an emailed statement Friday the district already passed its $90.3 million budget in June, which included a $2.4 million deficit that the district is covering with its fund balance. Despite an increase in property values, funding for day-to-day operations would remain unchanged, but the higher values could provide some financial benefits for the interest and sinking side of the district’s budget. 

“Increased property values improve our bonding capacity, allowing us to undertake necessary capital projects with voter approval, pay down debt sooner and save money on interest costs,” the statement said. 

The district’s combined tax rate for fiscal year 2025 is 9.3 cents per $100 in valuation, including a maintenance and operations tax rate of 6.9 cents and a interest and sinking tax rate of 2.4 cents. 

Halbert said county residents can use the McLennan Central Appraisal District website’s Truth in Taxation tool to find information on their estimated taxes. The tool can also provide information on taxing entities as well as dates and locations of public hearings where locally elected officials will determine tax rates.