Fair reform goal of appraisal panel

Appeared in San Antonio Express–News on 9/13/06

In establishing the Texas Task Force on Appraisal Reform, Gov. Rick Perry stated that "reforms are needed to bring greater fairness to the property tax appraisal system" in Texas.

The governor has put in place a task force of more than a dozen Texans from across the state to solicit public input and make recommendations for changes to the property appraisal process. Our goal is to issue a full report, including findings and legislative recommendations, which we intend to submit to the governor, lieutenant governor and speaker of the House before the next session of the Texas Legislature.

An editorial in the Aug. 28 San Antonio Express-News criticizes the task force even before our work has begun. It suggests this initiative is more about politics than substantive change in the appraisal process. The editorial also argues that the current appraisal system is working fine.

Let me respond to those criticisms and explain why I believe Perry has taken an important step in trying to fix what many taxpayers believe is a broken system.

The editorial does acknowledge that Perry and many taxpayers have been calling for increased protections from the effects of years of skyrocketing property appraisals and for reform of our appraisal system. During the debate over the recently passed school finance legislation, Perry and legislative supporters of that bill - which closed the loopholes in the business tax and provided a one-third cut in school property taxes - made the point that the next session of the Legislature needed to address the out-of control increases in appraised property values.

I call this phenomenon a "stealth tax" because appraisal creep is a hidden tax on property owners that goes into effect without any increase in local tax rates.

Let me give you an example of what happened in Dallas this year. Appraised values jumped 8.4 percent, which gave the local government a tax windfall of $120 million above the previous year's revenues. Rather than give back a significant percentage of the windfall to the taxpayers by cutting the tax rate, the Dallas city manager has recommended that the city spend all but $2 million of the revenues.

While Perry and the Legislature have put in place a new system to cut school property taxes by one-third during the next two years, other local government units are effectively neutralizing much of those cuts by taking advantage of "appraisal creep."

There are a number of factors the task force will focus on as it addresses this issue:

Should the 10 percent appraisal cap on residential homesteads be lowered since many homeowners face a doubling of their property taxes over a seven-year period?

Should revenue caps be put on all property tax increases, which would trigger an automatic rollback election by voters when spending increases by a certain level?

Should there be elected representatives to the boards of local appraisal districts, which currently are accountable only to the local governmental units?

What can the state do to avoid the imposition of "unfunded state mandates" on local governments?

And, yes, we do intend to look at an issue raised in the Express-News editorial: Should there be disclosure of real estate sales prices?

During the next few months, the Texas Task Force on Appraisal Reform will be listening to people from all across Texas on to how to fix the appraisal system. We have no preconceived conclusions, but hopefully we can come together with a series of recommendations that can be taken up in the next session of the Texas Legislature.

The Sharp Tax Commission, established by Perry to recommend a solution to the school-funding crisis, led to real school finance reform. That legislation was enacted after many years of frustration over the failure to reach agreement on that issue.

Our objective is to accomplish something similar here. Perry has noted the recommendations of the task force should "strike a proper balance between protecting taxpayers and ensuring funding for essential services."

Give us a chance to do our work before concluding that the Texas Task Force on Appraisal Reform is a meaningless exercise.

Tom Pauken is chairman of the Texas Task Force on Appraisal Reform.