Numerous letters to the editor and commentaries have been published recently in The Daily News concerning 2020 Galveston County property taxes, COVID-19’s effect on real estate values in Galveston County, a political request to Gov. Greg Abbott to roll back 2020 appraised values and the make-up and functionality of the Galveston Central Appraisal District.

As a 40-plus year practicing tax attorney who has compromised and resolved property tax disputes in Texas, Louisiana and Mississippi, I will discuss some of the misconceptions, errors and inaccuracies in these articles.

First, the appraised value of property, both residential and commercial, is determined as of the situs date, which is Jan. 1 of each tax year. Any subsequent events, developments and occurrences after Jan. 1, no matter how devastating or horrific, cannot be considered in determining the appraised value on Jan. 1.

Such events should be considered in determining appraised value on the following Jan. 1 of the subsequent tax year. For this reason, the effects of the COVID-19 pandemic, while certainly disastrous and catastrophic, cannot be considered in valuing property as of Jan. 1, 2020, since COVID-19 wasn’t known or in existence on Jan. 1.

Moreover, under Texas law, a disaster declaration doesn’t directly affect valuation, unless it causes significant physical damage or destruction to property. There are factual questions as to whether COVID-19 actually caused physical damage to Galveston property, notwithstanding that it caused severe damage to the economies of Texas and the United States.

Secondly, while Abbott undeniably has extraordinary power and authority under Texas law, he simply doesn’t have the stated authority to freeze or rollback local property taxes. The Texas property tax is administered locally by the 254 counties and isn’t controlled by the governor.

I sympathize with the opinions that the Galveston Central Appraisal District is abusing taxpayers, that its board of directors should be elected, not appointed by the appraisal district’s member taxing units and that it should be made to answer for escalating appraised values year after year without accurate data to support their positions (“Appraisal district is abusing taxpayers,” The Daily News, May 12; and “Maybe it’s time for elected appraisal boards,” The Daily News, May 23-24).

However, homeowners do have recourse under the Texas Constitution and statutes — they can timely protest their 2020 Notices of Appraised Value to the appraisal district, meet with a district representative, appeal to the Appraisal Review Board and most importantly, timely appeal the board’s order to the district court or to an arbitrator.

While I typically view the board hearings to be a rubber-stamp of the district’s determination, a request for binding arbitration typically generates a more favorable result for the taxpayer who has adequately prepared a case and who presents critical evidence that the district hasn’t equally and uniformly appraised the taxpayer’s property. The Texas Comptroller of Public Accounts website provides important guidance to taxpayers interested in protesting and appealing to binding arbitration.

Robert W. Nuzum is an attorney who lives in Galveston and who is qualified on the Comptroller’s Registry of Arbitrators as a property tax arbitrator in all 254 Texas counties.

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(5) comments

Jack Cross

Mr. Nuzum is correct about Gov. Abbott can't roll back property taxes or appraisals but he makes several mistakes in his column including he CAD Board of directors.

In 1979 the state created Central Appraisals Districts CADs. At the same time the legislature assigned the state comptroller as the governing agency for CADs. The state comptroller oversees every aspect of the appraising process. The state trains CAD auditors and ARB members, sets policy and audits CADs. The CAD elected board of directors have no authority involving the appraisal process.

Although not named, Texas really has two property tax systems, the first applies to cities, county, community college and mud districts. The second is for school districts.

Putting schools aside, cities and the other entities all set their tax rate to meet their budget needs. These taxing units have sole control over how much property tax you pay. While it is true that when appraisals increase your taxes usually increases, but that is because taxing units do not cut the tax rate. Galveston County for several years is one of the tax units that does cut the tax rate to keep taxes down.

The next time any state official tells you that he is running on lowering your property taxes, ask him how he is going to do that since the state doesn’t set the tax rate.

Now that it is established that the state can’t cut your property taxes, that takes us to the other tax system - Public Schools which is 54 percent of your tax bill. Here the state legislators have devised a method to achieving a desired end (scheme) The end is for the state to benefit when property taxes increase and shift the burden to you (the taxpayer)

The public-school tax system, how it works

State Comptroller Glenn Hagar office is the governing agency for CADs. A property tax division is a component of the comptroller’s office. The state property tax division conducts a property value study (PVS) that samples property sales within the school taxing district. The purpose of the PVS is to ensure that CADs are appraising at 100 percent market value.

If the CAD appraised values fall below the state study, state values prevail and the CAD must raise their values within a 2-year cycle. This is because the state benefits from high appraisals.

The School Funding Structure

Funding of Texas schools is a shared responsibility between local property owners and the state. School boards set a tax rate for the amount of revenue they need for maintenance and operations M&O, but unlike cities and other taxing units, the state has restrictions on schools with a fixed amount per student determined by complicated formulas that include items such as number of poverty level students and limited English speakers who cost more to educate.

The second restriction on school boards is a tax rate cap of 1.17 percent per $100,000 valuation for Maintenance and Operations (M&O). Texas City ISD and 401 other Texas school districts are at the cap limit and these school districts could not raise the tax rate even if voters were willing to tax themselves for better schools and teachers pay.

With school boards hands because of the caps that the state put in place they are prevented from using the taxable property values created by the appraisal increases plus new construction property values. If the state did not take the taxable values your appraisal increase created, school boards could cut the tax rate and lower your taxes and have even more money for schools.

Although the Texas Constitution prohibits a state property tax, the state is depending heavily on property taxes. By reducing the amount of state school funding this frees up money for the state to use on programs other than education. In 2018 this amount of local taxable property taxes the state put in the budget was about $3.8 billion dollars.

In 2008 the share of school funding between the state and local was about fifty, fifty, in 2018 it was 64% local and 36% state.

The easy way to solve this problem is to go back to when the state and local property owners each funded schools’ 50 percent. That would make both tax systems similar and school boards could operate like city commissioners in setting tax rates.

That is unlikely to happen because it would take a $10 billion dollar state increase in school funding each year to make the funding level even. That how much the state is shifting to the back of local property owners and that is why property taxes are going through the roof.

Since cities and other taxing units set the tax rate and the state has total control over public schools.

Using last year appraisals values would not lower your taxes.

Jack Cross

Counting individual property owners and tax agents, the Galveston CAD hears about 30,000 protest each year. CADs use mass appraisals and that system occasionally makes errors so property owners should protest (IN PERSON) but property owners are protesting the wrong place, It is amazing that 30,000 people protest at the CAD and hardly anyone protest the local government at budget time. This is where your tax rate is set that determines your taxes.

Ted Gillis

And what Robert and Jack failed to mention is that the ISD’s have the majority of the votes when it comes to electing CAD board members.

The county and cities usually have to pool their votes just to elect just one member (if that!)

So look to your school board members, more than your commissioner or council member to voice your complaints.

Jack Cross

Ted, you are 100 percent correct, but it your fix to the system is flawed.

Just like my post above, you have to understand a confusing system.

Here is how the the board member election works. First, I don't remember the exact numbers so I'll use my guess, but regardless, it will still explain my point.

Taxing entities elect CAD board members like you pointed out. To be elected it takes aprox 800 votes, The number of voted each taxing unit is based on the tax revenue they receive. You are correct again, since schools are 54 percent of your taxes they get the most votes and that guarantees that a big school district like Clear Creek can elect a board member and have votes to combine with another taxing unit to get additional representation. The County is the next big tax revenue grabber and they too are guaranteed a representation with extra votes. That leaves cities like Texas City, Santa Fe, La Marque, Santa Fe, etc. without 800 votes so like you said, they poll their votes to get a board representative. Among the pool, TCISD is the greatest tax revenue recipient so for many many years, there has been an agreement among the group that their representative to the CAD board will be a TCISD board member.

On just this issue, there is nothing sinister here. I would like to make another point ,regardless where the board member comes from, don't expect a change in how board members are elected to lower your appraisals because CAD board members have no authority over any aspect of the appraisal process. They do approve the CAD Budget and they do approve defending CAD lawsuits if needed.

I do agree that the board election process does need some changes,

so on most points, I agree with you.

Senator Paul Bettencourt is Dan Patrick's tax writing guru, he is terrible and has a conflict of interest. He writes the tax laws then his tax consulting business represents industry telling them how to beat the system. Bettencourt also represents thousands of property owners protest where he gets 50 percent of what is saved.

Bettencourt profits off high appraisals and then runs for reelection promising to cut your taxes.

Mark Stevens

As usual, Mr. Nuzzum has written a helpful and informative article. While I disagree that appraisal officials should be elected, Mr. NUzzum makes a very good point that the ultimate protection from truly arbitrary valuations is a suit in district court or perhaps better still binding arbitration. My limited experience in this are confirms his own observation--it works wonders when appraisal officials know that the taxpayer means business and will carry the dispute to its legitimate end, rather than just rolling over and playing dead.

Mark W. Stevens

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