Citing concerns about the property tax burden shouldered by Texans, Lieutenant Governor Dan Patrick has appointed a committee comprised of state Senators to: (a) study the property tax process, including the appraisal system, and recommend ways to promote transparency, simplicity, and accountability by all taxing entities, and (b) examine and develop options to further reduce the tax burden on property owners. This Senate Select Committee on Property Tax Reform & Relief is chaired by Senator Paul Bettencourt of Houston.
The Committee has scheduled public hearings across the state. Thus far, it has held hearings in Austin, San Antonio, Harlingen, and Lubbock, with the next hearing scheduled for April 27, 2016, in Arlington. As expected, there has been extensive testimony. Interestingly, public comments have been focused primarily on specific issues, not on the property tax system generally. This includes specific rates set by local taxing jurisdictions, not the Texas legislature, and local government spending. Public concern seems to center on taxing decisions made at the local government level and ways to curb local spending.
As property tax lawyers observing the Committee’s work, we note that Texas has one of the best property tax systems in the country. We know this because our counterparts in other states constantly bemoan inconsistencies and hurdles in their respective tax systems, followed by praise of the efficiency and seemingly fair nature of the Texas process. Our counterparts particularly laud the ability of Texas taxpayers to take their tax protest to a district court (rather than a tax tribunal) where they can challenge both market valuation and “equal and uniform” valuation treatment of their properties. In our experience, the Texas property tax system is the envy of taxpayers in many other jurisdictions.
Furthermore, according to a recent survey of Appraisal Review Boards administered by the Texas Comptroller of Public Accounts, taxpayers apparently agree that our property tax system works well. The 2015 survey produced the following results:
| Question | Strongly Agree/Agree |
|---|---|
| Is the ARB courteous? | 95% |
| Is the ARB attentive? | 93% |
| Is the ARB knowledgeable? | 85% |
| Is the ARB organized? | 92% |
| Is the ARB fair? | 77% |
Of course, no property tax system is perfect. There is always room for improvement. Nonetheless, we should be careful to avoid changing our property tax system just for the sake of change.
Importantly, in assessing the need for reform, we must view the “big picture” of state taxation—not just a component of it—to really understand the burden on taxpayers imposed by our state’s tax system. Despite our property tax burden, our overall tax burden is low. Texas ranks 46th in overall tax burden, meaning there are 45 other states with higher overall tax burdens. Only Alaska, South Dakota, Tennessee, and Wyoming rank lower. This speaks highly of Texas and supports the “business friendly” environment that our elected officials frequently boast. Texans should strive to preserve this status and be mindful of legislative reform that might have unintended, unfavorable consequences.
We commend the Committee and look forward to reviewing its findings. In fulfilling its charge, we respectfully encourage its members to:
- Protect the “equal and uniform” remedy which has come under attack by appraisal districts and taxing entities
- Improve the truth-in-taxation process to make it more understandable and useful
- Consider moving the property tax division from the Comptroller to a separate state agency and place tax consultants and appraisal districts under the review of this new agency
- Eliminate the ability of taxing entities to sue property owners when they disagree with ARB results
We would also like your input. Please let us know your thoughts on the following two questions:
- What would you do, if anything, to address the current property tax burden?
- What changes do you suggest to the property tax system?