Property Tax Relief and Appraisal Reform
Summary of Achievement
Governor Rick Perry has long championed property tax relief for Texans. In 1999, as Lt. Governor, he helped pass a record $2 billion property tax cut for Texas homeowners. In May 2006 Governor Perry signed a historic school finance reform plan that has since saved property owners over $16.4 billion in taxes.
Governor Perry also recognized that rising property appraisals were also causing the tax burden property owners across the state to grow rapidly. In response to this issue, Governor Perry created the Task Force on Appraisal Reform to conduct a study and make recommendations on how to address Texans’ continuing concerns over increasing appraisals. The task force held hearings throughout the state and issued a report on its recommendations in January 2007. Since then several pieces of legislation have been passed to make specific reforms to the appraisal process.The Challenge
Property taxes have been a growing concern for Texans across the State as rising property appraisals and tax rates were spiraling out of control. In 2006 The Texas Supreme Court ruled that the school finance system was unconstitutional, and Governor Perry appointed The Texas Tax Reform Commission to find a way property fund public school while giving property owners tax relief. At the same time, Governor Perry also realized that action needed to be taken to try and prevent any property tax relief from being overwhelmed by rising appraisals. Meaningful appraisal reform would ensure taxpayers would see lasting property tax relief. The Task Force on Appraisal Reform was created to propose ways the appraisal system could be reformed.Action / Initiative
The Texas Tax Reform Commission was charged with finding a way to lower school property taxes as part of an overall restructuring of the School Finance system. The commission conducted public hearings throughout the state, and took oral and written testimony from business owners, public citizens and elected officials. The commission’s work culminated with a proposal to reform the franchise tax and for the state to buy down school property taxes. Working from the Texas Tax Reform Commission’s recommendations, Governor Perry called a Special Session in 2006 to address school property taxes. The commission’s plan was passed by the Legislature, and in May 2006, Governor Perry signed into law a package of bills that has provided tax relief of over $16.4 billion in school property taxes. This reduction was accomplished by compressing school districts’ 2005 M&O tax rates by 11.33% in 2006, and by 33.33% in 2007. Essentially districts taxing at $1.50 in 2005, tax rates were compressed to $1.33 in 2006 and $1.00 in 2007.
The Texas Task Force on Appraisal Reform (TFAR) also began working on ways to resolve Texans’ continuing concerns over skyrocketing property appraisals. At the Governor’s direction, the task force gathered public input from across the state then developed a set of appraisal reform recommendations to protect taxpayers from the burdens of continually rising tax levies, while ensuring property taxes remained stable long term source of revenue for essential local government services. Some of reforms proposed by the Task Force were subsequently passed by the Legislature and signed by Governor Perry.
Through Governor Perry’s leadership on property tax relief, homeowners and businesses have saved over $16.4 billion on school property taxes since 2006. Without the reforms passed in 2006, many property owners’ tax bills would be 33 percent higher. This has reduced the burden of school property taxes on families, allowing them to keep more of their money.
Several of the Task Force for Appraisal Reform’s recommendations were passed into law during the 80th Legislative Session, including:
- HB 3024, which increased the burden of proof for the Appraisal District in an Appraisal Review Board hearing when the property owner submits an independent appraisal of the property. HB 3024 required the CAD to present clear and convincing evidence to support their claims.
- HB 3495, which modified public notices for a meeting where a taxing unit would vote on the local property tax rate. The notices are now required to include information about how much revenue was raised under the old tax rate on the existing tax base, and how much revenue the proposed tax rate will raise based on the existing tax base plus any new property in the tax base.
The Governor supported other appraisal reform measures that passed during the 80th session, including one placing a 10% limit on annual increases in a homestead’s appraised value regardless of when the property was last appraised.
The Governor has continued to push appraisal reform and supported a number of bills passed in the 81st Legislature during 2009 including:
- HB 3613, which provided 100% disabled veterans homestead exemption for the total value of their home and required that a home be appraised only based on its value as a home.
- HB 1030, which allows for property tax protests to be filed online and requires an Appraisal Review Board to reschedule a hearing if a property owner can show good cause.
- HB 8, which requires the Comptroller to review of the standards and practices of Appraisal Districts every 2 years and ensure they are complying with generally accepted standards through a Methods and Assistance Program. This will provide for oversight for the operations of Appraisal Districts across the state.
The Governor has also supported amending to constitution to enact appraisal reform, including the recently passed Propositions 2 and 3. Proposition 2 (in conjunction with HB 3613) requires homes to be appraised only based on their use as a home, rather than any alternative use and Proposition 3 give the Legislature the power to set statewide appraisal standards going forward. Both of these measures will help ensure that homeowners are treated fairly in the property tax system.