After holding eight hearings across the state over the course of eleven months, the Texas Senate Select Committee on Property Tax Reform & Relief issued its Interim Report on November 29, 2016. Chaired by Senator Paul Bettencourt, the Committee stated its findings and laid out its recommendations for reform. The primary factor compelling the need for reform is the staggering pace at which ad valorem tax levies have risen over the last several years. The report notes that, in the five largest counties in Texas, tax levies have increased between 2011 and 2015 from 14% in Tarrant County to as high as 52% in Harris County. “This increase is due to taxing units not cutting their tax rate,” the Committee explained.
The report relates the common frustration among taxpayers who testified at the Committee hearings of feeling helpless in challenging tax rates. This is because of the overly complex nature of the rate setting process and the onerous burden placed on taxpayers in petitioning for an election to reduce excessive tax rates to the 8% “rollback rate” currently allowed by law. The Committee concluded, “Based on the public testimony received by the Select Committee, it is clear that the process for setting and adopting property tax rates must be reformed to make it more transparent and directly accountable to voters.”
The report further relates concerns raised by taxpayers concerning the governance, transparency, and accountability of appraisal districts and appraisal review boards. These concerns include ignorance of appraisal review board members of certain valuation approaches, bias against taxpayers, and use by appraisal districts of faulty calculations in order to ensure that their adjustments of comparable properties show equal and uniform values. The Committee concluded that their needs to be more state oversight of local property tax systems as well as local reform to ensure a more convenient, competent, and fairer protest process.
Concurrent with the report, Senate Bill 2 was introduced by Senators Bettencourt, Creighton, Hancock, and Taylor. The draft legislation responds to the work of the Committee and offers numerous changes to the state’s property tax system. The most significant reforms are:
- Increasing the authority of the Texas Comptroller over the property tax process, which would involve the appointment of an advisory board and the responsibility to issue appraisal manuals for appraisal districts to follow
- Moving important deadlines in the tax calendar up, including deadlines for sending out notices of appraised value, delivering the appraisal records to appraisal review boards, certifying appraisal records to taxing units, and completing protest hearings
- Making appraisal review board members elected officials
- Raising the exemption amount on personal property from $500 to $2500
- Changing the appeals process to allow for panels of specialized members for commercial and complex properties and eliminating a taxing unit’s ability to challenge levels of appraisal of categories of property
- Reducing the “rollback rate” from 8% to 4% and requiring an automatic election for adoption of rates that exceed it
Tax Equity Council will be keeping a close watch on legislative developments. Obviously, property tax is a top priority this session. Tax reform appears to be on its way.