As you know, I’ve talked before about sunsetting tax expenditures. Sens. John Carona and Rodney Ellis have filed a bill to require a periodic review of the many exemptions, exceptions, and other special cases in the tax code, with the aim of requiring legislative approval to renew or extend them. This is a good idea for many reasons, and State Impact Texas highlights one of those reasons.
Whaddya mean we have to pay our fair share?
One break Sen. Ellis says could be targeted right now is one used by country clubs. Ellis will be the first to tell you what a lovely time one can have on the links of the exclusive River Oaks Country Club in Houston.
“I have a lot of good friends who are members there, have had the benefit of being able to play once or twice, would like to get invited again, may not get invited the day you run this story,” Ellis told StateImpact.
Two decades ago as a newly-elected legislator, Ellis saw a news article about how some local country clubs took advantage of a big break and avoided paying millions in property tax. Known as the Greenbelt Act, it gives enormous property tax discounts to owners of tracts of green space that is used only for recreation.
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Ellis’s staff found that in the 10 most-populated counties in Texas, a total of 36 clubs took advantage of the break (some counties had no clubs that used it including those in Dallas, Fort Bend, Travis and Bexar counties).
Harris County had by far the most clubs utlilizing the break with 22 of 26 private clubs saving millions in taxes. Ellis’s office found that the River Oaks Country Club had the biggest savings, about $2 million a year from getting its golf course’s market value of about $80 million marked down to only $4.2 million. A call to the club did not result in obtaining a comment.
OK, I’m open to suggestion here. What’s a good public policy rationale for giving this tax break to the River Oaks Country Club? Are we afraid they might lay off a groundskeeper or something if they paid taxes based on the actual appraised value of their property? Make your case in the comments, I’d love to hear it.
Not to mention the blatant discrimination that these country clubs display. Although I understand the River Oaks Country Club has a few African American and Jewish members, I wonder how many the Houston Country Club has. I’d venture to say that these institutions would rather give up their tax breaks rather than having their membership scrutininized around racial and religious diversity.
They need to pay their taxes in full. They’re not exactly operating for the common public good; this isn’t a greenspace that the public has access to. Ridiculous that they’ve been able to get away with it for so long.
Why do we give tax breaks for agriculture use? Why do we give homestead exemptions?
Exemptions encourage the continued use of properties for something other than development, and recognize that the alternate uses may not have income levels high enough to support taxation at the full rate. Don’t let the fact that River Oaks membership is rich skew your judgement on this. I have the HCAD data in Access. If I find the time, I’ll pull something out on the total ag and charitable exemptions for the County.
A quick review of the latest publicly available tax filing for River Oaks CC (it’s organized as a non-profit social club, and the filings are available at Guidestar or from the IRS, or from the organization, as is true of all non-profits) shows net income of $1.7 million for 2011, although that includes $3.5 million in non-cash depreciation. So, another $1.8 million in taxes would have an impact, most likely a 10-20% increase in member dues. The club employs over 500 staff, according to the filing.
Long story short: if property values, and accordant taxes, make green-belt use of a property no longer economically viable, the green will be replaced by shingles and asphalt. In large cities like Houston, a private golf course is practically the only commercial green-belt use of land available; it’s either the golf course, public parks, or pavement.