The Travis Central Appraisal District has requested an unprecedented boost of $2.9 million in next year’s budget to scrutinize the agency’s appraisals for accuracy and to mount a stronger defense against commercial property owners who challenge their tax bill.
The proposed 20 percent budget increase is in part a response to growing criticism that Texas’ property tax system unfairly benefits owners of large commercial properties, which activists say are often valued below market price.
Last month, the Travis County Commissioners Court and Austin City Council voted to study property appraisals after declining to challenge this year’s entire commercial property tax roll. Initiatives in the appraisal district’s proposed budget would add to those efforts.
The $17.1 million proposed budget includes $250,000 to hire an expert who would review high value commercial — and maybe residential — properties.
Another $470,000 would pay an outside appraiser to do so-called “fee appraisals” of 45 commercial and 20 high-end residential properties. A fee appraisal determines the value of an individual property by analyzing comparable sales.
These third-party studies could help the appraisal district refine the mathematical models that it applies to large numbers of properties to determine their values, Chief Appraiser Marya Crigler said.
To gather more data that could be used to build the models, the proposed budget also calls for $103,718 to hire the appraisal district’s first research specialist, who would track property sales prices from public data sources such as the U.S. Securities and Exchange Commission’s filings, Crigler said.
Texas is one of a handful of states that doesn’t require disclosure of sales prices. Of 1,500 recent commercial property transactions in Travis County, the appraisal district could only verify sales prices for 11 percent for use in this year’s appraisals.
The proposed budget also includes $925,000 in new funding for the appraisal district’s legal department. About 90 percent of commercial value is protested each year, and some cases end up in district court. Last year, there were more than 300 lawsuits filed on commercial properties.
Additional money for legal counsel and expert witnesses allows the district to “contest property valuations without being forced to settle too quickly for a lower value than we think is accurate,” said Dick Lavine, chair of the appraisal district’s board of directors.
The increase in the total number of protests, which went up by 14 percent this year, also prompted the appraisal district to propose $372,787 to hire five additional residential appraisers.
More than 100 taxing entities — including the Austin Independent School District, Travis County and the City of Austin — fund the appraisal district’s budget in proportion to the amount of taxes they levy.
After the appraisal district board adopts the budget, potentially at its August meeting this year, taxing entities have 30 days to decide whether to object to the budget, Crigler said. If a majority of the entities disapprove, the appraisal district will have to write a new budget.
Austin’s and Travis County’s budget writers have so far marked less funding for the appraisal district than it would need to fund a 20 percent budget increase, officials said. The appraisal district estimates a city contribution of $2.6 million and a county contribution of $3.2 million.
The City Council and Commissioners Court will adopt their budgets in the coming weeks.
In the 2009 fiscal year, the appraisal district’s budget increased by 10.4 percent, but since then, the budget has not grown by more than about 6.5 percent in a single year.
“We’ve held a very tight budget,” Crigler said.
When the size of the tax base is accounted for, the Travis appraisal district does its work at a lower cost compared to other metropolitan districts in Texas, Crigler said.
The Harris County Appraisal District, which earlier this year had its appraisals reviewed at the direction of the commissioners court, has proposed a budget increase of 11.5 percent. A majority of that increase would pay for attorney fees, expert witness fees, court costs and another two attorney positions, according to a district document.
The Dallas and Bexar appraisal districts are looking at budget increases of roughly 5 percent; the El Paso appraisal district decreased its budget by nearly 3 percent.
Michael Amezquita, the Bexar chief appraiser, said requesting a significant rise in funding would come as a surprise to taxing entities and taxpayers — and anyhow, he said, what would really help appraisal districts are legislative changes.
“I don’t care how much money you throw at it,” Amezquita said. “You can’t fix the tax scam.”
The American-Statesman has led the way with in-depth reporting on the debate over property tax appraisals, from explaining how many commercial landowners have lowered their tax bills to breaking the story in May about a possible challenge to the entire commercial tax base. Under public pressure to address perceived inequities in the appraisal system, the Travis Central Appraisal District is now seeking an additional $2.9 million to review and bolster its work.