Record-setting appraisal protests cause delays for local taxing entities

(Graphic illustrations by Jay Jones/Community Impact Newspaper)
(Graphic illustrations by Jay Jones/Community Impact Newspaper)

(Graphic illustrations by Jay Jones/Community Impact Newspaper)

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Image description
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Nearly every year since Bryce Cathcart bought his 600-square-foot home in East Austin in 2013, he has protested the appraisal value issued by the Travis Central Appraisal District.

“I never could have imagined the drastic increase in [home] prices in those seven years,” Cathcart said. “It’s mind boggling.”

In that period, Cathcart said his home value has doubled; next year, his tax bill is on track to exceed his mortgage payment.

“It’s almost like I own my home, but I rent my home, you know?,” he said.

Cathcart said he protests “out of sheer principle,” upset that property tax rates continue to rise even as local officials preach affordability.

“My city services haven’t increased or gotten better, but my property taxes have increased steadily every year,” he said. “There’s not really any balance there.”

Cathcart is not alone.

This year, 147,023 property owners in Travis County protested their appraisal values, according to data obtained from the TCAD. Nearly 87% were homeowners; the rest own commercial properties.

This represents a threefold increase since 2005, when 46,495 property owners protested their appraisal values.

In that same period, the average home value in Travis County has increased 76%, from $197,874 to $347,655, according to budget documents.

“We’ve had a very low supply of housing available, but very, very high demand,” TCAD Chief Appraiser Marya Crigler said. “When you’ve got that imbalance in your supply-and-demand curve ... prices go up. And we are just reflective of what we see happening in the market.”

Working to resolve this influx of protests, the TCAD has struggled in recent years to meet state deadlines, which are in place to ensure local taxing entities are able to set their budgets by Oct. 1, when the fiscal year begins.

A new state law aims to address these challenges, but area experts do not all agree that the number of protests in Travis County will decline.

Barking up the wrong tree

In Texas, appraisal districts are constitutionally required to assess properties based on their market value—basically, how much they sell for on the open market.

Once all properties are appraised and most protests are resolved, the appraisal district certifies the total taxable property value in a given year.

“Our only purpose [as an appraisal district] is to make sure that we’re doing an equitable distribution of the tax burden, not to set the tax burden,” Crigler said.

Taxing entities—including school districts, city councils and county commissioners courts—then set the tax rate necessary to balance their budget based on the total value in their jurisdiction.

Many protesters hope to lower their tax bill, rather than their home value. A 2017 survey found that 74% of protesters in Travis County fall in this camp.

But experts said they would be better served by urging their elected officials to lower the tax rates.

“The tax rate is actually discretionary, but the appraisal is not,” said Jennifer Rabb, the director of the McNair Center for Entrepreneurship and Economic Growth at Rice University, in testimony before the Texas Senate Committee on Property Tax on Feb. 6.

Regardless, property owners are much more likely to file a protest with the appraisal district.

“We’ll get 147,000 people that may come to protest at the appraisal district ... but you may only get a dozen to show up at the tax rate hearing,” Crigler said.

Sorting out the delay

The high volume of protests in Travis County not only delayed the appraisal district’s operations but also affected area taxing entities, which depend on receiving the certified tax roll to set their budgets.

Some were more affected than others.

In Round Rock, where only a small portion of the city lies in Travis County, the effect of a delay on the adoption of the city’s budget and tax rate was not as pronounced as for other taxing entities.

Will Hampton, the communications director for the city of Round Rock, said the TCAD worked with city staff to inform them of updates throughout July and August.

“Once the city knew the certification date would be delayed, we adjusted our adoption calendar accordingly,” Hampton said.

Round Rock ended up adopting its tax rate two weeks later than usual, but officials were still able to complete the city’s tax rate notices, hearings and adoption in accordance with its own city charter and the state of Texas’ truth in taxation laws, he said, adding the city’s budget was adopted as originally planned.

“Our Travis County properties are only 3% of the city’s total taxable assessed value, so there was no meaningful uncertainty on our budgeted revenues,” Hampton said.

The TCAD’s delay of the tax rolls also forced later deadlines in Leander. Finance Director Robert Powers said the city’s final tax rate calculations were delayed by about two weeks, but due to the fact that Leander’s proposed tax rate was below the effective tax rate calculation, or the rate that would generate the same amount of revenue as the previous year, the effect was minimal.

“If the proposed tax rate was below the effective tax rate, then the city would have been required by state law to hold two additional public hearings, and that would have delayed the final adoption of the city’s tax rate and budget,” Powers said.

For several other entities, there were no discernible negative effects resulting from the TCAD’s delay.

Anastassia Mitchell, the multimedia content coordinator for Central Health, a local taxing entity created by Travis County voters in 2004 that provides health care access, said there was no effect pertaining to the adoption of either their tax rate or their budget. The TCAD communicated their timelines, and Central Health was able to meet their planned deadlines, she said.

The same was true for Cedar Park. Jennie Huerta, the city’s public information officer, said its budget and tax rate were adopted well within the statutory deadline.

But not all taxing entities were unaffected or minimally affected.

In Austin, City Council adopted its $4.2 billion budget and ratified its $0.4431 tax rate per $100 of valuation on Sept. 10 but could not officially adopt the tax rate until Sept. 25.

Leading up to the tax rate adoption, Austin Chief Financial OfficerEd Van Eenoo said the sheer volume of protests received by the TCAD and the subsequent delay in validating the tax rolls rendered the public hearings the city held Sept. 13 and 19 on the tax rate “kind of pointless,” as council had already passed the budget based on the $0.4431 rate.

Julie Oakley, the interim city manager in Lakeway, said her city did not receive tax values from the TCAD until Aug. 19, and they were statutorily required to have them in by July 25.

Similar to what happened in Austin, Lakeway was also delayed in adopting its tax rate.

“The process to adopt the tax rate is very prescriptive by law, and you don’t trigger that time frame until [taxing entities] propose the rate,” Oakley said. “Normally we would have had our budget and tax rate adopted at the September regular council meeting [third Monday of the month], but we had to push it all the way to Sept. 30 this year.”

Oakley said she is aware of the growing workload at the TCAD and how busy that district is, but unexpected forced delays in adopting a tax rate will likely be further complicated in the future by Senate Bill 2, a new state law that caps annual revenue growth for most taxing entities in Texas at 3.5%, down from the current standard of 8%.

For the city of Rollingwood in western Travis County, officials did not adopt the tax rate until Oct. 7.

Rollingwood City Administrator Amber Lewis said she sympathizes with the volume of work levied upon TCAD, and the district is working hard to keep up with the rapidly rising number of protests. But she added the Aug. 20 arrival of Rollingwood’s tax valuations from the TCAD, more than three weeks past the official deadline, had lingering effects.

“We had to hold more special meetings, so if you weren’t paying attention to all of the special meetings, you may have missed an opportunity [to speak during public comment], whereas during a normal tax rate setting and budget setting process, most of that would be conducted during regular meetings,” Lewis said. “But this time we had three additional special meetings just to meet the new time requirements because of the late certified roll.”

System improvements

In an attempt to handle the increasing number of protests, the TCAD introduced electronic protests for the first time and increased its number of appraisal review boards—which review formal protests and decide whether to adjust an appraisal value—to 40, quadruple the number it had in 2017, Crigler said.

The TCAD also purchased an $8.5 million building that houses the boards and will allow the appraisal district to expand its staff.

When it takes effect in October 2020, Senate Bill 2 will require that property tax notices are delivered to property owners and more information is made available about public hearings and the tax rate adoption process.

The new law also allows appraisal districts to certify the total taxable value before resolving 95% of protests. Officials said this could help avoid the delays that occurred this past summer.

Crigler said it is too soon to tell the effects of this new law but added: “[W]e might see fewer people protesting their taxes to the appraisal district when they are aware that they’ve got other ways and other venues that they can provide input.”

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