America's Property Tax Advisor

Taxpayer Engagement in the Texas Property Tax Process


The Texas Select Committee on Property Tax Reform held another meeting at the Capitol in September to discuss ways to get taxpayers more fully involved in the property tax process.


While owners are well aware of their right to appeal when their property is over assessed, they often don't participate in the setting of tax rates, which is equally important.


Texas Has a Good System


The Texas property tax system is, when compared to other state’s systems, one of the most taxpayer friendly of all. It's designed to make it relatively easy for an aggrieved taxpayer to address his concerns at the most informal level possible.


By state law, notices stating the intention of the appraisal district to place a taxable value on real property are sent regularly to each owner. The notice encourages the taxpayer to meet informally with the appraisal officials and makes clear the deadline date by which official action to formally appeal a value must be made. The notice also provides information concerning prior year’s values and taxes.


If a taxpayer chooses to meet with appraisal officials informally and is unsatisfied with the results of the meeting, all that is required to take the issue further is to meet with the Appraisal Review Board for a formal hearing. The Appraisal Review Board members are not employees of the appraisal district and have received prescribed training from the Texas Comptroller’s office concerning their duties and responsibilities. They are required by law to hear arguments from both the appraisal district and the taxpayer and make a fair and impartial determination of the issue.


If the decision made by the Appraisal Review Board is unsatisfactory to the taxpayer, the State offers a low-cost alternative to litigation. The taxpayer may file for binding arbitration at a greatly reduced cost versus litigation in a district court. This cost can be as low as $450, depending upon the property in question. Or, if the taxpayer wishes, he may proceed directly to district court.


In Texas, taxpayers have experienced this process for a number of years and based on the numbers of appeals filled annually, have a good understanding of the process. Also based on the numbers, taxpayers are generally successful in their appeals. Taxpayer involvement in the establishment of a taxable valuation is not, in the opinion of many, where the Texas system fails. The problems lie in the need for increased taxpayer participation in the rate setting process.


Focus on Setting Tax Rates


The establishment of a tax rate is the issue that many in the Texas legislature feel is overlooked by the taxpayer. Although Texas has specific laws limiting the establishment of tax rate, it is clear that some tax entities abuse the process.


Texas laws limit a tax rate rising more than 3% over the effective rate, i.e., the tax rate that would yield the same revenue as in the previous year, without publishing notice of the entities intent to do so. These laws go on to require that a tax rate raised 8% or more over the effective rate is subject to a referendum and possible voter rollback.


Interestingly, many rates go up 2.99% or 7.99% in order to avoid these notice and referendum issues. Too often, some tax entities tell their taxpayers they “have not raised the tax rate in x years,” implying, of course, that the elected officials have been responsible with their taxes. In fact, given Texas’ growing economy, property values have risen significantly, thereby yielding a windfall of property tax revenue in such circumstances where the tax rate has been left at a prior year’s level.


The Select Committee wishes to address this matter in the best interest of all, including taxpayers and tax entities. Increasing the public’s participation in the establishment of tax rates to the same level of involvement the public now gives in the establishment of a taxable value will, in the long run, be good for all of Texas.


Ideas such as holding all statewide bond and tax rate votes on the same date is being considered. Requiring tax entities to deliver to each taxpayer specific notices of their intentions concerning tax rates instead of using notices in local papers is also of interest. The committee’s goal is to encourage taxpayers to participate in all events that affect the amount of taxes they pay annually to local government.


Exactly what steps will be mandated by the Legislature to insure these goals are reached are yet to be determined. Any system of notification to a taxpayer of planned actions by local tax entities concerning the establishment of a tax rate must be cost effective, timely, and achieve the desired goals of taxpayer participation.


What is certain is that the Legislature will address these issues in 2019. Input and participation from interested citizens is desired and given constructively, will greatly improve the final legislation. November 12, 2018 is the first day for legislative members and newly elected members to pre-file bills. We expect a number of bills affecting property taxes to be introduced shortly thereafter and encourage taxpayers to participate in this effort to insure fair taxation.