In 1979, the state created central appraisal districts, CADs. Legislators wrote a tax law and appraisal procedures. The comptroller was assigned as the state bureau to be the governing agency for the districts. As the governing body, the comptroller has major influence on every aspect of the districts’ operation.
The districts must follow appraisal procedures and practices developed by the state. The comptroller’s responsibility includes training appraisers and other key district employees, training appraisal review board members and providing model hearing for the Appraisal Review Board to use.
Comptroller agents make yearly on-site visits to audit district governance, operating procedures, appraisal standards and methodologies. State agents conduct a property value study using real estate sales to ensure that districts appraise at 95 percent to 100 percent of market value.
The study is important to the state because it determines how much money the state sends to school districts. Higher appraisals benefit the state because increased appraisal values result in less money the state sends to school districts, thus shifting more tax responsibility to local property owners.
If district values are below 5 percent of what the state determines are true market values, the district must correct the deficiencies before the appraisal values are finally set in January. Noncompliant deficiencies are referred to the Texas Department of Licensing and Regulation for enforcement.
School funding is the reason for the rise in property taxes. It is complex, loaded with formulas and not well-understood by the public. It is no secret that voters are irate over rising property taxes and this is why the governor and other candidates run on property tax reform while running away from the real problem, school finance.
Promising to fix a state problem with a local tax cap is deceiving, and really, just another unfunded state mandate. School taxes are 54 percent of all property taxes, a tax cap would not apply to school taxes. A tax cap will not lower your appraisal, there is no limit on market value.
The rules on how schools are funded has a staggering impact on both taxpayers and the quality of education. In recent years, the share of funds the state sends to school districts has declined from 48 percent to 37 percent. This results in an astonishing loss of local property tax dollars that taxpayers have to make up.
The Texas Education Agency estimates it will “recapture” $5.13 billion during the next budget period, up from $3.69 billion in the current budget. Freeing up state money for school funding allows the state to use local property taxes for programs other than education. It’s really a tool to help balance the budget.
School districts already saddled with shrinking state revenue for operations and paying salaries to keep good teachers, now are having to ask taxpayers to pay more taxes for school bonds.
Tying the hands of local governing bodies with an open-ended tax rate cap, that does not include schools, appraisal values or service fees may get you elected if enough people buy into it, but it would not fix or change anything.