There’s widespread agreement that the Texas property tax system is broken and needs fixing. Property owners know something is wrong, but the complicated appraisal/tax structure leaves property owners puzzled about who to blame.
There are actually two different property tax structures, each with different rules, and if you were to include Robin Hood it’s three. This writing will focus on tax system No. 1, which is the simplest of the three.
The process begins with the central appraisal district.
CADs were created by the Texas Legislature in 1979 as part of a sweeping change designed to standardize the administration of appraisals under one central appraisal.
When the state created CADs, the legislators put the state comptroller as the state agency to be the governing agency over CADs.
You could say that CADs are similar to a quasi-public sector corporation acting independently with private sector employees who work under rules established by the state.
The comptroller sets all rules and audits CADs. It trains CAD appraisers, the appraisal review board and oversees every aspect of the appraisal process.
CAD board of directors are elected by the taxing unit. The directors establish the budget, approve lawsuits and contracts and other management duties, but they have limited authority over the appraisal process.
THE PROPERTY TAX SYSTEM
What I call tax system No. 1 includes cities, counties, community colleges, MUD districts and emergency services, and all other taxing bodies except school districts. These taxing units set tax rates to meet their budget requirements.
For cities, and similarly counties, property taxes fund police, firefighters, sewer, garbage, libraries, streets, parks, infrastructure and pensions. These taxing units sometimes are subject to unfunded state and federal mandates.
Some taxpayers may disagree, but usually there isn’t a lot of areas to cut that will make a big difference in your taxes unless you eliminate services or major projects.
Every two-year election cycle, state officials from the governor on down to state representatives run campaigns promising to cut property taxes, yet appraisals and property taxes keep increasing.
The truth is that the state can’t lower taxes in any of this group of taxing units because the state doesn’t set the tax rate.
The last legislative session, the state set a 3.5 percent cap that would trigger an election before going above that rate, but that isn’t a tax cut, it just slows the rate of increase. If your appraisal value increases and the taxing body does nothing, you get a tax increase. Add a 3.5 increase to that; it’s a pretty good jump.
The tax structure for this taxing group is straightforward and easily understood; not so with public school funding.
Part two covering the school tax system will show how a well-intended 1982 U.S. Supreme Court decision (Plyler v. Doe) ruling turned the property tax system on its head pushing property taxes sky high and on a track to get higher.