Business group sets battle lines on appraisal debate

Texas homeowners are feeling the burden of escalating property taxes because of changes in the economy and increased local spending — not because large commercial properties are undervalued on tax rolls, an influential business group argued Monday.

The Texas Taxpayers and Research Association, whose members include some of the state’s largest companies, released the four-page study in response to a drumbeat of homeowner complaints about property valuations, particularly in Austin and Houston.

“The available data does not support the claims of rampant and substantial undervaluation of commercial properties,” said Dale Craymer, the association’s president.

The report underscores where the battle lines will be drawn for next year’s Texas legislative session, when chief appraisers around the state and homeowner groups are expected to push for disclosure of commercial property sales and other changes to the appraisal system.

Dissatisfaction with the property appraisal system is a perennial issue at the Capitol, but the current debate centers on whether large commercial property owners are abusing a system that allows all taxpayers to challenge if their valuations are in line with comparable properties.

Critics argue that commercial property owners are appealing their valuations — sometimes every year — and claiming that their property is appraised above the median value for comparable properties.

As their valuations are lowered, the median value of commercial property spirals downward, setting up the rationale for another appeal next year.

Michael Amezquita, chief appraiser for the Bexar County Appraisal District, said the appeals “are nothing more than the manipulation of values of ‘comparable properties’ that results in values lower than market value.”

He said commercial properties typically sell for a lot more than their value on the tax rolls.

“This is not anecdotal evidence,” Amezquita said. “It’s reality and it happens all the time, every day, in every major metropolitan appraisal district in Texas.”

The report from the Texas Taxpayers and Research Association contends that the appeals are not the problem.

In 2012, there were about 1 million challenges — from both homeowners and businesses — on the 17.6 million parcels of property in Texas.

Only 2.8 percent of the challenges resulted in reductions in the property’s value, according to the report.

“Given the economic shifts at hand, procedural changes are not going to provide any noticeable relief for taxpayers,” Craymer said. “That will only result from lowering the local government spending that predetermines property tax burdens.”

The study does acknowledge that residential property has become a bigger part of the state’s property tax revenue during the past 20 years.

In 1994, homeowners accounted for 39.5 percent of the school taxes. By 2013, that number had risen to 47.7 percent.

The study, however, argues that changes in the Texas economy — not tax policy — have led to that shift.

During the past 20 years, Texas gained 3 million service jobs while losing 94,000 manufacturing jobs. Service companies are less property-intense than commercial or industrial operations, according to the study.

Likewise, there have been demographic and lifestyle changes.

During the past 20 years, Texas has experienced a 45 percent increase in the number of single-family homes.

Also, homes are larger and more expensive, even adjusted for inflation.

All that contributed to the shifting tax burden, the study said.

At almost $45 billion annually, Texas property taxes are up 58 percent from 10 years ago and three times greater than 20 years ago, according to the study.

“Property owners should certainly pay attention to their values and contest them if they appear too high,” the study concludes. “But that will not put a dent in property taxes as long as spending continues to rise.”

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