Texas Property Tax Reform

Texas Property Tax Reform

Texas Property Tax Reform

Posted on September 25, 2018

Efforts Underway to Make the Property Tax System More Taxpayer-Friendly and Transparent

There is overriding concern in the state that there needs to be property tax reform. Texas taxpayers are demanding that their state legislators make changes as appraisals and tax rates continue to rise. Under the current system of property taxation, appraisals can increase up to ten percent per year for homesteads, but there is no cap on increases for other types of properties. Taxpayers want some relief.

According to Ray Head, past president of the Texas Association of Property Tax Professionals who currently serves as chair of the Government Relations Committee, “The system needs to be more transparent, more taxpayer-friendly. This will translate into savings for the taxpayer. Much of the reform needs to come from the administration level.” 

There are three branches of that administrative system – the Appraisal District, the Appraisal Review Board, and the Appraisal District Board of Directors: 

The Appraisal District – the Texas Tax Code requires appraisal districts to appraise property at 100% of its market value January 1st of each year. These valuations are used by the cities, counties, and school districts who set their tax rates based on these valuations.

The Appraisal Review Board – is charged to resolve disputes between taxpayers and appraisal districts.  

The Appraisal District Board of Directors – oversees the Appraisal District.

Head explains, “Many of the frustrations I hear from taxpayers could be resolved by changes in these three entities.

“At times, people are appointed to Review Boards with little or no appraisal experience; there needs to be better training and possibly better pay for these individuals. There also needs to be more separation between the Appraisal Districts and Review Boards. The Appraisal Review Board was initially designed to be a buffer between the taxpayer and the Appraisal District. Although there have been a lot of bills over the last few years to try and bring more separation and independence between the two, that is not always the case. When you have Appraisal Districts paying Appraisal Review Board members and giving office space, parking lot space, etc. to Review Boards, it blurs the separation between these two entities. Appraisal issues are often very complicated, it is easy for Review Boards to fall back on the valued opinions of their Appraisal Districts, to take the path of least resistance. The Appraisal Review Boards need to go back to what they were originally created for – independent judges of cases brought by taxpayers.”

One crucial piece to the puzzle in helping property owners reduce their tax rate is for property owners to attend rate hearings. Rate hearings give taxpayers the opportunity to express their views on budgets and tax increases. In compliance with the Texas Open Meetings Act, all taxing units must post notice of the meetings.  According to Head, “There were 140,000 property tax protests in Travis County this past year, but very low attendance at the rate hearings where property rates were set. Taxpayers need to understand that the protest of their property valuation is only a part of the fight to have their taxes minimized. They also need to be as involved in their districts’ rate hearings.”

Rate hearings can be a very complicated process which many taxpayers tend to shy away from. There is a lack of education to bring awareness that this is even an option for disgruntled property owners.  

Some argue that increasing sales tax rates could replace rising property taxes. “This could make it hard for many families. Higher state sales taxes could handicap these families that are trying to provide basic needs for their households. Studies have shown that replacing the property tax with a sales tax would require a sales tax in excess of 20 percent. This is not an acceptable option for our citizens.

“I don’t see any major reforms in the next legislative session – some tweaks, but no sweeping reforms. There was a big push last year for limiting tax rates. These tax bills, that could have given relief, got buried when the focus turned to ‘the bathroom bill,’ so nothing happened. 
Going into the next legislative session, disaster relief will be at the forefront in response to the destruction caused by Hurricane Harvey. This could possibly override the attention that tax reform would have received,” says Head.

Head continues, “Governor Greg Abbott has outlined some changes in the government tax plan that will help taxpayers better understand and work within the system to get reductions in their property taxes.”
Industrial Property Tax Solutions has more than 35 years of experience helping taxpayers minimize their property taxes. Contact us online or give us a call at 830-248-1190.