Across Texas, homeowners are feeling the pressure of high property taxes, and our state’s broken commercial property tax system bears part of the blame. As noted in a previous post, Proposition 1, which is on the ballot in November gives some property tax relief, but, potentially much more relief could be provided to home-owners if commercial property was valued at market value.
The City of Austin recently contracted for an analysis comparing appraised values of commercial properties to actual sales prices over the years of 2012 through early 2015. They found the average undervaluation in the year of sale was:
- 48% in 2012
- 44% in 2013
- 53% in 2014
The average undervaluation for these three years was 47%.
They segregated commercial property into two categories; unimproved and under-improved land versus developed property. The greatest undervaluation was for the unimproved and under-improved land and the undervaluation for 2012 through 2014 was 92%.
The effect of this disparity in valuations of commercial property and residential property is to cause residential property to pay a larger share of the property taxes that are levied and collected by the taxing entities. If more money was collected from commercial property owners, then the money collected from residential property owners could be reduced.
The primary cause of the undervaluation seems to be the unavailability of sales price data to the Assessor on commercial properties. There is currently no Texas law requiring disclosure of sales prices. Thus, the obvious solution would be for the legislature to pass a law requiring sales price disclosure.
Austin has filed a law suit stemming from a petition the city filed in June with the Travis Central Appraisal District. It contends that the appraised values of billions of dollars in commercial and vacant land do not match market prices, a violation of the state Constitution's requirements that all property be taxed “in proportion to its value” and in an “equal and uniform” manner. State Comptroller Glenn Hegar is also listed as a defendant.
Perhaps the City of Georgetown should conduct a study to determine if the under-appraisal of commercial property is an issue in Georgetown. Let your city council person know you are concerned about this potential issue.
Here is a link to a report on the Austin law suit. http://www.texastribune.org/2015/08/24/austin-sues-texas-over-unequal-appraisal-system/
There is a separate Texas Watchdog report that talks about local county and city excess bond debt. Oct. 21, 2015 - Watchdox TX report on excess bonding in TX
ReplyDeletehttp://franklincenterhq.org/12201/texas-watchdog-local-government-debt/
WE are having similar problems in Florida where cities, counties or School Districts get voters to pass one penny sales tax referendums for 15 years, then use that the run up big debt to build expensive buildings, etc. The tax is coming up for a Nov. 3 ballot in Lake County, FL to renew it for the third time. It has already been used to provide $450-million in slush funds for the first two 15 year cycles, and now all the elected officials want to renew it again.
My local government watchdog blog is at www.fiscalrangers.com Use it for ideas, or send me an email to be on my list at fiscalrangers@comcast.net