CRAYMER: SB 2 Property Tax Reform has Three Basic Pillars

PART VI of The Craymer Series":  SB 2 makes your Property Tax Bill more visible and consequently more understandable.

By Dale Craymer

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Texas Insider Report: AUSTIN Texas  I would like to commend the Senate Committee on Property Tax Senator Bettencourt Lt. Governor Dan Patrick and Governor Greg Abbott for not giving up on the very contentious and controversial topic of Property Tax Reform.

This is the most far reaching property tax legislation we have seen since 1979.

I am writing here today to explain some of the key aspects of the property tax reform efforts that have begun to move through the the Texas Legislature specifically Senate Bill 2.

SB 2 has three basic pillars:

  1. Tax Visibility
  2. Appraisal Review Board Reforms and
  3. Tax Rate Adoption Provisions

Tax Visibility. We hear the word transparency" used in talking about this bill but I quibble with that word.

SB 2 does not make your property tax bill more transparent; it does just the opposite. It makes your bill more visible and consequently more understandable.

That is exactly what the system needs.

Today the property tax system is a black box. You get an appraisal from someone whos never seen nor been in your house or on your property. Several months later you see these confusing notices appear in the paper about tax rates and hearings dozens or even hundreds of them. Finally in October you get a tax bill with anywhere from 4 to 8 different jurisdictions half of which youve never heard of telling you how much you owe them.

Debbie Cartwright in our office testified recently at a February 6th Senate Hearing on SB 2 along with Travis Central Appraisal District Chief Appraiser Marya Crigler explaining that the Texas Taxpayers and Research Association strongly supports the provisions of SB 2 that provide taxpayers a real time website on which they can see:

  • How proposed tax rates are going to affect their tax bill
  • Who the decisionmakers are and
  • How they can make their opinion known BEFORE those rates are adopted. 

This process is standardized with uniform worksheets promulgated by the Comptroller that will be publicly available to taxpayers.

Appraisal Review Board Reforms. SB 2 provides improved training for Appraisal Review Board members and special panels with specific expertise to hear disputes over complex properties along with a number of other reforms we view very positively:

  • Time & Dates of Hearings
  • Access to Evidence from the CAD
  • Protections against Abusive Determinations (ARB cant raise your value) and
  • Protections against Political Influence over the Appraisal Process (taxing unit cant challenge).

Tax Rate Adoption Provisions. We do have two areas of the bill that lead us to be neutral over-all on the bill at this time.

First the bill strikes the current requirement by which voters may determine if their local schools may impose a tax rate for maintenance and operations (M&O) above $1.04.

We would ask that the provision in current law be retained regardless of what is done with school tax relief. Otherwise within 5 years property owners could see their school M&O tax rate climb to $1.17 without ever having an opportunity to vote on the increase.

This would negate any benefits we might otherwise see with city county and special districts tax rates.

We would note that even at the $1.04 tax rate under our school finance system school districts are guaranteed that they receive full funding for enrollment growth as well as additional equity funding based rising values.

Second in 2017 we supported the senate property tax bills in both the regular and special sessions. We believe that the 8 rollback threshold in current law does not reflect the realities of todays inflation and economic environment.

Nor do we find the current petition requirement for an election to be workable in larger jurisdictions. We believe an election to exceed the rollback threshold should be mandatory as SB 2 provides; however we are unable at this time to say that a 2.5 rollback threshold is the appropriate level

Finally I would like to address other pertinent items for consideration in the bill.

First we strongly support uniform school tax rate compression as property values increase either the Governors 2.5 or perhaps and hopefully even a rate lower than that.

While I understand that may be included in the school finance bill if it is not we would like to see such a provision added to this bill.

Second while SB 2 increases the reporting requirements of data concerning property taxes it is critical that the data be accurate.

We would ask that the legislation provide the Comptroller the authority and resources to verify and correct property tax data submitted. Any of us who have worked with the data files have found it is sometimes sent to the agency with for example decimal errors that must be manually corrected for accurate analysis.

Finally I would suggest considering using a maintenance and operations levy rather than the total levy as the basis for determining a small district allowing them to remain under the 8 percent rollback. Voter-approved debt service would be excluded from the threshold as this obligation has already been approved in an election.

I would however suggest including debt service on any non-voter approved debt such as certifications of obligation in the threshold determination. The increasing use of certificates of obligation without voter authorization is a troubling development in many jurisdictions.

The Texas Taxpayers & Research Association will be closely monitoring all the activity and advocating for sound and responsible fiscal and tax policy that ensures fairness for all taxpayers.

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Dale Craymer is President of the Texas Taxpayers & Research Association.

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