With Election Day less than three months away, Gov. Rick Perry named a 15-member "Texas Task Force on Appraisal Reform" to look into the links between rising property values and higher property taxes.
Tom Pauken of Dallas, former chairman of the Texas Republican Party and a candidate for various offices over the years, will chair the panel. He's now a mediator/attorney and helped start up an online news publication called Dallas Blog. Pauken, a stalwart of the conservative wing of the GOP, split with that bunch over tax reform earlier this year to back Perry's proposal for higher taxes on business to pay for cuts in local property taxes.
Perry, in announcements in Dallas and Houston, indicated his preference for limits on property tax growth, saying local governments should have to ask voters when they want more money. "If people are going to pay more in taxes to local government, it ought to come because of a vote and not the appraiser's note," Perry said in a written announcement of the task force. He put his orders in a proclamation (linked here) and said he wants a report by early January, in time for the Legislature to do something during its regular session next year.
The others on the 15-member board include: Lubbock City Councilman Gary Boren of Lubbock, vice president of an employee staffing company; L. Curtis Culwell, superintendent of the Garland Independent School District; Harris County Judge Robert Eckels; Hidalgo Mayor John David Franz, who is a lawyer in real life; Bob Garrett of Tyler, a homebuilder and president of Fair Management and Fair Oil Company of Texas; Robert Garrett, owner and broker with Coldwell Banker First Equity Realtors in Amarillo; John Nichols of Freeport, tax director for Dow Chemical Co.; San Antonio attorney Rolando Pablos, who headed a private group that promoted Perry's tax plan before and during the special legislative session earlier this year; Brooke Leslie Rollins president and CEO of the Texas Public Policy Foundation, a conservative think tank in Austin; Timothy Roth, a professor of economics at the University of Texas at El Paso; Calvin Stephens president and chairman of SSP Consulting in Dallas; Michael Stevens, who chairs a real estate and development firm in Houston; Brazos County tax assessor-collector and chief appraiser Gerald "Buddy" Winn of Bryan; and Avis Wukasch, a Georgetown real estate agent and chairman-elect of the Texas Association of Realtors.
Pauken, who had high praise then and now for John Sharp's committee on the business/property tax swap, hopes to emulate its success. But that panel had two advantages over the new one: A court order to change school finance forced the Legislature to act, and the group wasn't meeting in the last 75 days of a heated race for governor. He's optimistic anyhow: "The system is not fair. It's not working right... if we come up with a common-sense approach, I think the Legislature will do something."
The push-back on appraisal and revenue caps has come mainly from the local governments that would be regulated by them. Appraisal caps often result in disparities between the tax values of similar properties. Values are reset when properties sell, and newly sold properties can end up on the books at higher values than, say, their next-door neighbors.
Texas already has a form of revenue caps for cities and counties: If overall taxes — the value of all property times the tax rate — increase by more than a given amount, voters can step in. Frank Sturzl at the Texas Municipal League says the state already controls the appraisal process and says if there's something wrong with it, they ought to fix it. But he says new limits on local governments could reduce services or, more likely, cuts in capital projects and long-term maintenance of roads and buildings and other infrastructure.
Cities get, on average, 34 percent of their revenue from property taxes and another 27 percent or so from sales taxes. Counties, most of which don't receive sales tax money, are even more dependent on property taxes. And most property taxes don't go to either government: Most go to schools, and the state's funding formulas regulate the pressure on those taxes. When the state pays a bigger share, the heat's off the local schools; when the state backs off, tax pressures go up, and that shows up in property tax rates. The current political die was cast during a series of years when state demands on schools were rising and state funding as a share of the total wasn't keeping up. The tax bill passed earlier this year is supposed to address that.
Both TML and the Texas Association of Counties have been watching, apprehensively, for several years as Perry and other officeholders have called for caps. Appraisal caps have failed to win legislative approval several times. Revenue caps haven't been tested as much, politically speaking, and at this date, seem less likely to fail. But it's not clear they're a good bet, either.
Perry has pushed caps for several years, as have lawmakers, particularly from the Houston area where this has been a hot button issue in political clubs and on talk radio. But Pauken and a spokeswoman for the governor say he isn't telling the task force what to produce. And Perry's spokeswoman goes further, saying they're not trying to solve a problem with local government spending — the problem is with appraisals and "stealth tax increases."
Pauken says a small staff will come on board as early as this week, and the panel will meet for the first time in mid-September. They'll go around the state for public comment and write a report for lawmakers in time for the beginning of the regular session in January. Some early ideas that'll be in the mix: accountability of local appraisal boards and the possibility of putting more elected people on them, requiring public records of property sales to include prices, as is done in all but a dozen states including Texas, and lower caps on valuation increases on individual properties, so that gentrification and other quick changes in property status don't force residents to move to cheaper neighborhoods.