The special legislative session began on July 18, 2017 and will conclude in 30 days. Property tax reform is not a new concept and many Texans are calling for anywhere from slight reform to an all-out elimination of property taxes. Wherever you stand on the issue, there are currently 4 items on the agenda in the property tax bill for the special legislative session this year. They are:
- Slowing the growth of property tax increases;
- Removing bias Appraisal Review Board (ARB) members;
- Making information more easily accessible to property owners;
- Creating an advisory board to the Texas Comptroller
Property Tax Growth Limitation
This provision will require tax entities to limit revenue growth from existing property to five percent annually, unless they hold an election and ask for a higher tax rate. There is currently a disconnect between the growth in real estate values and the growth in household income. Property values for homes in Texas are generally growing at 8 to 10% annually, with the exception of slower growth currently in Harris County. However, household income is growing at about 2.3%. Property taxes are based on a percentage of home values, so property taxes for most home owners are growing at 8 to 10% annually. This is about 3 to 4 times the pace of household growth. Based on this trend, property taxes will double every 10 years while household incomes will double every 25 years. Limiting the growth of property taxes would mitigate the growth of property taxes in excess of the growth of household income.
Appraisal Review Board (ARB)
An ARB chairperson is to be elected by ARB instead of selected by appraisal district board of directors. – This would allow the ARB more independence. Currently the ARB chairman is perceived to be beholden to the wishes of the appraisal district.
There is also a provision to remove an ARB member for bias. – This would be a great change. There is currently no option to remove ARB members who vote for the appraisal district 95 to 99% of the time at the ARB. Unfortunately, there a number ARB members who vote with the appraisal district in almost all cases.
This would also not allow ARB members to raise a value during a protest hearing. – This rarely happens but the fear of it stops some homeowners from appealing their property taxes.
It would also increase training for ARB members from four to eight hours. This would be an improvement but still grossly inadequate. Our opinion is that ARB members should be real estate agents, appraisers, brokers or others familiar with the valuation of real estate.
Taxpayer Access to Information
Appraisal districts would be required to send property owners the evidence they plan to use at the appraisal review board at no cost, upon request. Property owners would still have to request their evidence packages from the appraisal district. Currently, property owners have to go to the appraisal district to pick up the evidence if it is not available on-line. The information is not available on-line for most appraisal districts. Between picking up the evidence, attending the informal hearing and attending the formal hearing (ARB) can require up to three visits to the appraisal district in a single year. Requiring the appraisal district to mail this information to the property owner would be much more convenient for property owners.
Appraisal districts should have a current database of property records easily accessible to property owners. – While some appraisal districts have the tax roll data available on-line, most do not. The appraisal districts who do not have it available on-line are sometimes slow to respond to open records requests. Property owners should have easy access to this information in preparing for hearings.
Oversight of Appraisal Districts
The last item on the agenda would be the creation of an advisory board to Texas Comptroller to advise on efficiency, best practices and complaint resolution. – There is currently no oversight of appraisal districts other than the board of directors. The board of directors of appraisal districts are representative of tax entities. It is akin to the sheep watching the hen house. Our experience is the board of directors of appraisal districts are not interested in addressing clear-cut violations of the Tax Code. Examples include the Board of Directors for Harris County Appraisal District (HCAD) not addressing the issue of HCAD generating unlawful evidence that generates a predetermined value for unequal appraisal for protest hearings. Neither are they interested in the issue that neither the appraisal district nor the appraisal review board (whom they “technically” do not control) not considering unequal appraisal at the informal or formal hearings. The only option for a Harris County property owner to have unequal appraisal considered is to attend the ARB hearing and then either: 1) file a lawsuit in district court, 2) file for binding arbitration or 3) file a lawsuit with the State Office of Administrative Hearings (SOAH). Another example is reports of Bexar County not producing evidence they intend to present at the ARB hearing 14 days ahead of the hearing as required by Tax Code (41.461, 41.67d). This has been reported for years and neither the Bexar County Appraisal District nor the Bexar ARB is willing to address it.
If you are in favor of any or all of these property tax reform items, please contact your state representative. If you do not know who your rep. is, click this link. The time is now to make your voice heard!