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The Senate Select Committee on Property Tax Reform and Relief met on March 21 in Lubbock to consider the following interim charges:
 
Study the property tax process, including the appraisal system, and recommend ways to promote transparency, simplicity, and accountability by all taxing entities.
 
Examine and develop options to further reduce the tax burden on property owners.
 
 
Opening remarks from Sen. Charles Perry

  • Property tax reform is an issue that pops up about every ten years
  • The legislature appreciates local control and appreciates the ability of local leaders to make decisions that are best for their area
  • People are making decisions on whether or not they can afford to buy a house based on whether they can afford the increasing property taxes
  • There is a perception that there is a smoke and mirrors game going on and the system is not very transparent

 
David Shoemaker, Committee Policy Analyst

  • Discussed increases in property taxes in Lubbock county versus median income; taxes have increased by significantly more over the last ten years
  • Discussed the way property tax bills are calculated
  • Discussed voter’s ability to decide on tax increases; school districts have tax ratification elections, tax backed bond debt must be voted on, and for city, county and special district M&O taxes they must hold rollback elections
  • There was a large increase from 2014-2015 in number of protests filed on appraisals

 
Tim Radloff, Chief Appraiser, Lubbock Central Appraisal District

  • Responsible for appraising property; also contracted to collect taxes
  • Chairman Paul Bettencourt asked what percentage of roll is turned over to collections every year
    • Maybe 2-3%
  • Bettencourt asked about how complaints are handled between appraisal office and tax collector’s office
    • About 85% come to appraisal office; lots of complaints come in about tax rate and they are sent to the appropriate entity
  • Bettencourt asked about the levy increase
    • County increase from 14-15 was 9.61%
  • Bettencourt asked if that was split between commercial and residential
    • Residential was just over 6%; commercial average was about 3-5%
  • Bettencourt asked if the growth curve was extremely high to get it up to a 9% levy increase
    • Lubbock County also increased the tax rate from 14-15% so that will account for some of that
  • Bettencourt asked for recommendations
    • Have been given a job to appraise property at market value; the system in place now works very well although it isn’t perfect; the ARB process is unique among states; even though there was an increase in number of ARB protests filed about half were settled informally
    • A downfall of a mass appraisal system is that everything about each piece of property is not known so appraisals are not as accurate as they could be
  • Sen. Kelly Hancock asked how many new rooftops are coming into the system
    • About 1,000 per year
  • Bettencourt noted there is 1% growth, appraisals were up 4% and commercial property has barely gone up 10% on average; curious how that turns into a 9.61% levy increase; may be explained by the split between residential and commercial property

 
Ronnie Keister, Tax Assessor Collector, Lubbock County

  • County moved tax collections to the appraisal district back in the 1980s
    • A lot of community leaders felt the tax collector was not being fair to all citizens
    • Many citizens felt that it was appropriate to consolidate appraisals and property tax collections
  • The only clear method to claw back collection responsibility was through a citizen petition
  • Citizens wanted the tax collector to look at cost and see if it would be cheaper to move it back; probably need some clarification in the law regarding how much additional money can be collected from each entity for collection of their taxes
  • Bettencourt asked how the bifurcated system is working
    • Radloff noted it has worked ok and the citizens have accepted it; everything is located in one office and that makes it easier
    • Keister noted it works well and the community appreciates the ease of the process
  • Bettencourt asked what is driving the appraisal protest increase
    • Probably just the valuation increases
  • Bettencourt asked what is the number one complaint
    • Tax bill is too high
  • Perry asked if the protest rate is consistent
    • For the most part
  • Perry asked if the rate doubled what would that mean to the office
    • The appraisal office could handle it; it would probably mean that people don’t agree with the information being seen in the market by the district which is translated into appraisals
  • Sen. Van Taylor asked about the process; is the appraisal methodology available to the public
    • Yes; there is an FAQ on the website that explains the process simplistically; also will visit individually with property owners to explain the process with more detail
  • Taylor asked if method for classification of property is available
    • Residential classing manual is available to the general public
  • Taylor asked if it is available online
    • No they have to come in to get the manual; they can see all property classifications online
  • Taylor asked about ARB member training; members are not licensed and there is no recourse if an ARB member acts inappropriately
    • Believe that is correct
  • Taylor asked if a taxpayer is allowed to cross-examine testimony from an appraiser
    • Yes
  • Taylor noted that is not necessarily allowed in other areas of the state
    • Correct; it makes for a better system if it is allowed
  • Taylor asked how long an individual ARB hearing takes
    • The ARB procedures allow for 20 minutes
  • Taylor asked about hearings being scheduled and rescheduled; burdensome for the taxpayer
    • All hearings are scheduled; one rescheduling is allowed without cause; beyond that it goes to the chairman to determine if a rescheduling is allowed
    • A notice is mailed with schedule 15 days in advance
  • Taylor asked how far in advance appraisal notices are mailed
    • They are mailed April 1 and they have until May 31 to come visit with the office about the appraisal; about 60 days
  • Taylor asked if the office has considered phone or video ARB hearings
    • Don’t have any problem with that; video would probably be better
  • Taylor asked if property owners are asked for their purchase price information
    • If it would help to reduce their value it will be asked for
  • Taylor noted some districts ask for purchase price information from every property owner; is that information requested
    • Yes market price information is requested in a mail out; it is made clear that the information is not mandatory to submit
  • Bettencourt asked if the district charges for evidence packets
    • It depends; not if it is emailed and not if it is only a few pages; for large packets it is generally 10 cents a page
  • Bettencourt asked if Radloff would testify for a bill that prevented charging for electronic transmission of evidence packets
    • Yes
  • Bettencourt asked if the district offers online protests
    • For residential property; it is not taken advantage of very often

 
Paul Harpole, Mayor, City of Amarillo

  • Amarillo has shown fiscal responsibility for quite some time
  • Total debt tied to property taxes is only $24 million
  • Achieved AAA bond ratings from all three rating agencies
  • Cities with low rates and more fiscal restraint are more negatively affected by rollback elections because a rollback election would be triggered by a smaller increase in levy than in cities with higher tax rates because rollback elections are tied to a percentage increase
  • The amount of growth could require additional streets to be built, additional staff, additional services and the cost of those things could be hard to achieve because of a rollback election
    • A blanket 4% rollback rate would punish restrained cities more
  • 60% of sales tax comes from people who live in other cities
  • Taylor made the point that rollback elections mean local control because the voters get to decide
  • Perry noted the Mayor made a valid point about a rollback election affecting cities with lower rates more
  • Bettencourt asked if an inflation plus growth rollback election trigger would be better
    • Yes possibly

 
Todd Klein, Lubbock Resident

  • Fairest way to determine value more accurately may be to do an assessment of a home during the closing period
  • It may be fair to look at adjusting the cap rate to prevent people from being taxed out of their homes

 
Lee Norman, County Judge, Garza County

  • Tax rate is stretched to capacity
  • Small rural counties lack the ability to achieve value through volume
    • Also lacking in multifaceted economy
  • Sen. Carlos Uresti asked how a reduced rollback rate would affect the county
    • It would mean additional expenses to hold the election
  • Uresti asked how a reduced rollback rate would harm the county in case of an emergency
    • Emergencies can, and have in the past, cost the county over 100% of the entire county budget
  • Bettencourt noted any solution the committee comes up with will take into account emergency situations

 
Lauren Decker, Texas and Southwestern Cattle Raisers

  • Discussed that differences in the way rural land transfers are done can cause confusion in the taxing system

 
Gary Painter, Sherriff, Midland County

  • There are a lot of responsibilities that a county has that are very expensive such as health care and prisons
  • Bettencourt discussed how rollback rates aren’t the same as revenue caps and many times levy increases are higher than tax increases because of appraisal increases
  • Uresti discussed how sales tax decreases because of decreased economic activity particularly in the oil patch can necessitate budget cuts; what areas get cut
    • A lot of the time law enforcement is the first place cuts are made

 
Don Allred, County Judge, Oldham County

  • Discussed how every county is different; Oldham County has increased and decreased taxes based on economic issues many times in the recent past
  • Tax increases and tax decreases are not always what they seem
  • Just reducing the ability to increase taxes is not the answer
    • Need to look at costs driving those increases
  • Taylor asked about a cap on spending similar to the state cap; how would that work
    • If the state would allow a county to cap how much they have to spend on things such as indigent defense and jail populations it could work
  • Taylor asked if Allred would be opposed to a spending cap on local government
    • Yes, unless it addressed the cost of things the county spends money on
  • Taylor asked if Allred opposes a balanced budget provision for state government or federal government
    • No
  • Hancock asked if Allred would be for a spending cap if inflation and population increases were taken into account
    • That wouldn’t necessarily help; county cost increases go up based on, for example, how many murder cases there are in the county; that wouldn’t be addressed through inflation and population limitations

 
Darren Frederickson, Tax Consultant; Representing Texas Oil and Gas Association

  • Texas has the best and most effective property tax system in the nation
  • ARBs should not have a connection to the appraisal district and should be separated completely
  • Bettencourt noted he has heard a lot of similar comments about ARBS from other witnesses
  • Taylor asked if there are some appraisal districts where the witness cannot get classification information or methodology for appraisals
    • Generally you can get that information; sometimes there is an issue if the appraisal district uses a consultant
  • Taylor asked if there are issues with ARB hearing scheduling
    • Not an issue all over the place but it is an issue with some districts

 
Brian Wright, White Ranch, Mason County

  • Ranch land property tax system has issues in the way property is appraised; based on potential income
  • Discussed a situation where an ARB member asked a question of the chief appraiser during a hearing
  • A regional ARB would help
  • Better training should exist for ARB members
  • Comptroller’s office should revise guidelines so that ARB members and property owners can understand them
  • Bettencourt noted the situation the witness described is appalling; there will be real penalties for this type of behavior in the future

 
Tim Addison, County Commissioner, Yoakum County

  • Mineral rich counties have a very volatile tax base
  • Yoakum is 93% mineral and only 7% commercial and residential property; oil and gas price fluctuations make it hard to budget, especially with rollback rates when rollback elections cost $25,000 per election with such a small budget
  • For counties such as this a 4% rollback rate would not be enough
  • A one size fits all approach to rollback rates will not work for every county

 
Lubbock Association of Realtors

  • Believe tax increases should be derived from the rate side of the equation and not the appraisal side
  • Taxing districts should not realize an increase in levies on the back of a landowner’s unrealized gain

 
Jeffery Lowry, Madera Companies, Representing Texas Apartment Association

  • Property management company
  • Texas Apartment Association believes ARB members and the ARB process needs to be held more accountable
  • Should separate ARB process from appraisal districts
  • TAA supports greater transparency on ballot language for bond issues
  • Want to continue to have E&U provisions under law; sales price disclosure is a competitive disadvantage
  • Taylor asked about ARB members being licensed by TDLR; would that help
    • ARB members are citizens, that would be a control and accountability point; would really just like to see them understand the appraisal process and understand that one parcel does not make a market

 
Rick Bennett, Individual

  • Eliminating taxes on property altogether may be a better solution

 
Kara Speer, National Association of Social Workers

  • The fastest way to achieve fair property taxes is to provide health insurance to more low income residents
  • This would reduce the costs of indigent health care

 
Britt Hurst, Individual

  • There needs to be a cap on government revenue
  • Government spending is wasteful

 
Suzanne Bellsnyder, City Manager, City of Spearman

  • Described how efficiently her city is running
  • Rollback elections are expensive
  • The committee is talking about big city problems and there are small cities taking care of business that do not need these solutions
  • There may need to be exemptions for cities that don’t raise nearly as much revenue
  • Revenue caps could have the unintended consequence of creating more local government debt

 
Gregory Lewis, Individual

  • Taxed at the same rate as Lubbock County but do not receive services from Lubbock County
    • Buffalo Springs Lake has their own services

 
Downing Bolls. County Judge, Taylor County

  • Unfunded mandates are a headache for county governments
  • When tax exemptions are granted to businesses through mechanisms to generate growth in an economy, that share of the tax burden gets shifted
  • There is an issue with people not understanding the tax system therefore they are unable to do anything about being treated unfairly

 
Josh Weingarten, Texas Cattle Feeders Association

  • Discussed issues where appraisals on feed yards have gone up ridiculous amounts
  • Believes it happens when counties hire consultants for specialty appraisals
  • One feed yard appraisal went up 300% in one year but the ARB process did offer relief
  • Bettencourt asked if rural ARBs have a better understanding of this issue
    • Yes but many ARB members do not understand that they can overrule the chief appraiser

 
David Landis, City Manager, City of Perryton

  • Local government does not need state government setting mandates on taxes
  • Nobody knows the needs of a local area better than the elected officials of that area
  • In a state where no state funding goes to cities how can the state dictate how city money is collected or used
  • Do not continue to impose rules, procedures and costly regulations on cities
  • Taylor discussed the fact that state government created county governments; it is the responsibility of the legislature to impose rules and regulations