Lawmakers should not confuse appraisals more
Any session of the Legislature will have its share of disappointments for bills that didn’t achieve something new and significant. But at least lawmakers should remember the primary rule of medicine: First, do no harm. Unfortunately, they ignored that advice by passing a bill that would remove deadlines for appraisal appeals and expand a problem that is already undermining industrial tax payments. Gov. Greg Abbott must veto it even though it is being passed off — inaccurately — as property tax relief, a key campaign goal of Republicans in this session.
Property owners currently have 30 days to protest a valuation, usually by the middle of May. That time span could have been extended a bit, but the bill effectively removes it, allowing owners to file retroactive appeals going back many years. If their appeal is approved, local governments would owe them refunds, even though that money would have been spent long ago.
Without the certainty of knowing how much money they have to work with in a fiscal year, cities, counties and school districts could either hope they aren’t hit by retroactive appeals or set aside some money to pay for them. Neither option is going to help them to deliver the services that local taxpayers want and need. This problem is particularly relevant to smaller taxing entities with one or two large tax sources.
Worse, the bill could extend the so-called “equity appeals” to residential properties that industrial plants in Texas are now using to drive their appraisals below true market value. That loophole in the tax code basically allows them to find a similar property somewhere — even in another state — with a lower assessed valuation, and then use it to protest their valuation. It’s become a “race to the bottom” that is depriving local governments of the tax revenues they deserve — mostly from highly profitable corporations that could easily afford to pay their fair share.
That’s bad enough, but if small businesses and homeowners start playing this game, local tax revenues could fall significantly. That will either force local governments to raise tax rates to compensate or cut back on the public services they provide.
Bills like this make the appraisal process unnecessarily complicated. Deadlines are part of life, and most people will meet them when it’s in their best interest. Tax appraisals should be based on one thing — fair market value, what that property is worth if it were sold.
Again, this is not property tax relief from state lawmakers. It’s passing the buck to local governments, almost in the form of another unfunded state mandate. Texas roads, schools and drainage systems will improve less if it becomes law.