Appraisal Issues PrePeveto to TFAR

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Appraisal IssuesPre-Peveto to TFAR
TASA Midwinter Conference January 30,
2007 Jesse Hoke, Executive Director Texas
Association of Assessing Officers
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• Those who cannot remember the past are condemned
  to repeat it.
• George Santayana (1863 - 1952), The Life of
  Reason, Volume 1, 1905

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Pre-Peveto Days One Property-Three Different
Values

• Property taxes since the days of the republic
• Very little guidance on ad valorem tax
  administration
• Each entity did its own thing

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Pre-Peveto-Taxing Units Appraised

• Each unit was responsible for its own appraisals
  and exemption administration
• Almost no consolidation of appraisal services
• Almost no coordination of appraisals
• Different bills with different values on the same
  property

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Pre-Peveto Assessment Ratios

• Levy tax rate x (value x Appraisal Ratio)
• Percentage of market value
• ARs could be changed by governing body
• Allowed the tax rate to remain the same or go
  down without changing the levy.

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Pre-Peveto Politicized Reappraisal Cycles

• Reappraisals were the political kiss of death
• Reappraisals cost money
• Unfair to new owners of property-carried an
  unfair burden of the tax levy

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Pre-Peveto SALY Appraisal Techniques

• Same As Last Year
• Appraisal education was limited and not required.
• New property was valued using only the cost
  approach

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Pre-Peveto Big Chief Tablet Technology

• Manual use of local schedules
• No computer systems
• Paper maps
• Limited use of ratio studies

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Pre-Peveto Three Places to Protest

• Protesting value was a (frequently) unproductive
  hassle
• Equalization Boards were often elected
  officials
• SALY limited protests
• Limited information to protesting parties

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The Peveto Bill (1979)

• Central Appraisal Districts

• Property Tax Code

Passed after four tries
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Now One Property-One Value

• Tax code standardized practices
• Separation of appraisal and collections
• More taxpayer-friendly system

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Now CAD Appraisal

• CAD are a special governmental unit solely
  responsible for taxation appraisal
• CAD administers exemptions
• CAD administers special valuations

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Now 100 of Market Value

• Property appraised at 100 of fair market value
• Special appraisals such as agriculture
• Capped homestead appraisals

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Now Required Reappraisals

• CAD reappraisal plan required
• Maximum 3 year cycle
• Property Value Study may require more frequent
  reappraisals
• Limits political influence in appraisal

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Now Trained and Licensed Appraisers

• Registration with Board of Tax Professional
  Examiners (BTPE) to earn Registered Professional
  Appraisal designation
• Standard curricula by the Property Tax Education
  Coalition
• Statewide access to required courses by qualified
  instructors
• Required exams

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Now High Tech Tools

• Complex database systems
• CAMA mapping systems
• Aerial and satellite imagery for discovery
• Handheld PCs for field work

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Now One Place to Protest

• One ARB for one appraisal
• Taxpayer access to more and better information
• Defined and well-publicized protest system
• Appeals to arbitration and court
• Translation MORE PROTESTS

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Texas Task Force on Appraisal Reform (TFAR)

• Also called the Pauken commission
• Appointed by Gov. Perry
• Charges from appraisal standards to caps
• 11 public hearings, one report, 6 recommendations
• Apparent lack of consensus

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TFAR 1 Revenue Cap

• Redefined ETR calculation new property
• Rollback is ETR plus 5, automatic election
• Counties, cities, other districts (not ISDs)
• Highly criticized by TML, CPPP

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TFAR 2 Improve Appraisal Process Fairness

• Change CAD Board-221
• Change appraisal process itself including
  expanding arbitration to multiple issues
• Improve TNT laws
• More information to taxpayers

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TFAR 3 Change Comptroller Property Value Study

• Change focus from audit to operational review
• Continue yearly PVS
• Increase margin of error to 10
• Critics sayif you are trying to improve
  appraisals, why make the test easier?

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TFAR 4 Prohibit Unfunded Mandates

• AG determines if it is a mandate
• Comptroller determines cost
• Mandate suspended until legislature funds
• Constitutional issues
• Other local government fiscal obligations
  resulting from state/federal omissions

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TFAR 5 Sales Price Disclosure

• Render fair estimate and foundation
• Closing documents if you are remiss
• Keep it confidential
• Tied to 5 revenue cap
• Concerns about sales-chasing

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TFAR 6 Constitutional Proposals

• Levy on a five year rolling average (with phase
  in)
• Local option sales tax of ½ cent/appraisal cap of
  5
• Opponents point to regressive nature and
  inequities

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Other Legislative Issues

• Reduction of ISD clout on CAD board?
• Appraisal caps?
• Elected ARBs or CAD boards?
• Forced consolidation of collections?
• Association lobbying prohibition?

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SUPPORT YOUR LOCAL PROPERTY TAX APPRAISER