“I find it odd that you overvalue my home the first year I pay taxes and not let me dispute it.”
That complaint was sent in June 2019 by Patrick Schroeder against the McLennan Central Appraisal District, located in Waco, Texas. “My issue with McLennan County Appraisal District/ARB is how do they overvalue my home $34,000 the first year I own [it?] I was not given any notice of their overinflated value.”
This was one of nine comments or suggestions that year regarding the appraisal and protest system in McLennan County. One was an apology from a taxpayer over his behavior in response to the taxable value assigned to his home. The rest were complaints (three from Schroeder), including a record of a lawsuit against the appraisal district by two other taxpayers over the taxable value assigned to their home.
These records are probably a fraction of the discontent present.
As has been revealed throughout this investigative series, Schroeder’s experience is similar to that of many Texans caught in the middle of the tax-hiking cartel of appraisal districts, local governments, and the Texas Legislature (which designed this system).
Texas Scorecard contacted and interviewed Schroeder, a former police officer who has lived in Texas for about 40 years.
“I think it all started the first year of purchase. … The value was badly off.” He purchased the home in 2017 for $275,000, but he said the taxable value was set at $309,000. “I was never sent any notice, nothing of the sort,” Schroeder said. “I have the house for a whopping two months, and they’re trying to go higher and higher, and that’s what threw me off.”
Schroeder said when he contacted the appraisal district about the fact he received no notice, he was pushed off. “They just said, ‘well, sorry, you didn’t get your notice. You should have come up and got it,’ or something of the sort.” He tried appealing his value to the appraisal review board, and was denied.
Schroeder also pointed out to the district that they were violating state law because they increased the taxable value of his home over 10 percent. “I was telling them, ‘Hey, you’re screwing up. Tax code 2323 says this,’ and nobody was really listening.”
This experience was different from the one he had with the Harris Central Appraisal District, back when he lived in Houston. “There’s a whole procedure that Harris County followed to the tee. Unfortunately, McLennan County would not.”
As previously reported, complaints have arisen against the Harris CAD as well.
Since that time, Schroeder says the McLennan CAD has been steadily increasing the taxable value of his home by 10 percent year to year. “Now my $275,000 house is worth $475,000, or $450,000.” His property tax bills have also gone up. “I think it’s increased probably about $1,500, I want to say. I might be off a wee bit, but somewhere in there.”
Texas Scorecard asked Schroeder if his personal income has increased by that same amount. “No, sir. My personal income has decreased because Joe Biden is saving me right now,” he chuckled.
Schroeder said he tried calling for help from Gov. Greg Abbott, Attorney General Ken Paxton, the federal government, even the news media. He said Paxton’s office replied that they have no jurisdiction over municipalities and counties, and he doesn’t recall hearing back from Abbott. He got some calls from the news media, but nothing really materialized from that. No help came from the federal government. “I can’t do a dang thing, and I’m being charged out the wazoo.”
Taking Down the Cartel
Some may suggest that the only way forward to cleaning up the cartel oppression of taxpayers are pinprick measures such as appraisal reform. Some suggestions may be worthy of exploration.
“We need to look at reforms to make sure the appraisals are done correctly and without bias and with fairness, and with taxpayers having a seat at the table,” said State Rep. Brian Harrison (R–Waxahachie). “But the ultimate responsibility for taxes going up every year is local elected officials who run the taxing jurisdictions.”
Again, as previously reported, local governments—cities, counties, school districts, etc.—set your tax rate, and their tax rate is dictated by the elected public servants and how much they decide to spend. “They lower the rates, and then they brag to the taxpayers,” Harrison said. “But unless they lowered it enough to equal last year’s effective rate, now called the no new revenue rate, then they are knowingly casting a tax hike and then lying to their voters.”
Nothing gets me more angry than when government officials lie to my constituents.
Not only that, but the appraisal districts are controlled by the local governments, and the Texas Legislature set up this entire system.
North Texas Realtor Chandler Crouch, who has helped tens of thousands of homeowners protest their appraisal for free, points out that the property tax system that was set up before 1979 was much worse. “Each individual taxing entity had their own tax assessor collector, and they had their own appraisal division. If you wanted to protest, you would have to go to each individual taxing entity to protest,” he explained. “When you start to contrast what happened in the ’80s versus what’s happening in 2022, it’s obvious that the world has evolved beyond the functional utility of that system.”
In other words, reform got taxpayers to a point where their pain isn’t as bad as it once was. But there’s still pain, further proof that reforming appraisal districts alone won’t solve the problem.
“The real problem is too much government spending, whether it be at the local level, and honestly at the state level,” economist Vance Ginn told Texas Scorecard. “What we’ve really got to do is hit the trunk of the tree first, which is too big a government, and start cutting at that, or the problem will just continue to get worse.”
What would cutting the tree look like? A taxpayer in Jasper County, roughly 260 miles east of Austin, mentioned one way that would buzzsaw and break up Texas tax-hiking cartel.
Alicia Davis, a married 46-year-old hairdresser, like Schroeder and so many others, is also frustrated. “My land has been in my family since 1857. So this property tax thing, it has struck a chord with me,” she told Texas Scorecard. Davis put together a petition that has more than 1,500 signatures. The petition not only targets the Jasper County Appraisal District (JCAD), but all the members of the tax-hiking cartel in her area. It contains allegations of bias, corruption, arbitrary appraisals, and more.
“We are demanding the immediate investigation and removal of Chief Appraiser Lori Barnett. In addition, we are also demanding the removal of the current JCAD board and ARB members and elimination of the appraisal district,” it reads. “We are demanding that you hear our pleas to drastically reduce your spending, budgets and tax rates as taxpayers are having to do.”
Then Davis’ petition presents the buzzsaw.
We are also pleading with our State and local governments both to eliminate the State guided and locally administered and forcefully collected ad valorem property taxes.
Tim Hardin of Texans for Fiscal Responsibility puts it bluntly. “The solution is to eliminate property taxes altogether,” he said. “There [are] a number of different, very sane ways to fund government. It could take multiple different forms, and none of them have to involve property taxes.”
State Rep. Harrison agrees. “Property taxes are unethical. They deny people a chance to ever own their home,” he told Texas Scorecard. “Perhaps worse, they allow this shell game between the appraisal districts and the local taxing entities.”
Our current property tax system must be abolished.
Can such a thing actually be done? Ginn, Hardin, and James Quintero of the Texas Public Policy Foundation each explained how the Texas Legislature could do this.
Eliminating Property Taxes
The plan starts off with targeting the biggest portion of your property tax bill: school district taxes. These are taxes Patrick Schroeder complained about. “I don’t even use the school system, my wife and I still homeschool our kids,” he said. “Irony seeing all my money go to a public school system that I don’t get to use or take advantage of.”
The most recently published data from the Texas Comptroller found that last year property taxes collected in 2021 increased more than 4 percent from a year earlier—roughly $69 billion to more than $73 billion.
Ginn explained that eliminating property taxes starts by targeting the Maintenance and Operations Tax Rate of your school district. “That’s like funding payroll, utilities, just the day to day operations of the schools.” Of the roughly $72 billion of property tax monies collected statewide, Ginn said that tax rate hauls in about $30 billion.
“What we could do is really take a big bite out of our property tax bill, by finding a way to eliminate the school M&O property tax, which is really a statewide property tax,” Ginn said. “That’s why the state is also connected to all this with their spending as well, because the state legislature determines the school finance formulas that fund schools across the state.” Currently, the funding expectation is set at about $14,000 per student.
But how to take this “big bite”? Gill points to what he calls a “buy down” option, which he said has the most momentum. It involves two steps. “Limit government spending to population growth and inflation, or even less really would be good.” The next step is flowing money from surpluses of state taxpayer monies collected to buy down the school M&O tax rates until they no longer exist. Schools would still be funded, and taxpayers would experience tremendous relief.
“Eventually we want to get that school M&O levy to zero,” Quintero said. “We want school finance to effectively run through the appropriations process at the Capitol, and I think that’s where it’s best settled.”
Regularly following this plan in time will do just that. “If you do that every biennium here in Texas, it would take about a decade,” Ginn said. “Meaning that about half the property tax in Texas would be eliminated.”
“At that point, you’d have to deal with I&S [Interest & Sinking], which is school debts and bonds—which is a lot trickier—and funding local government,” Hardin said. While the rest may be “trickier,” Texans for Fiscal Responsibility’s goal remains clear. “Our overall proposal is the complete elimination of property taxes.”
Unlike the pathway to eliminating the school M&O tax, Ginn doesn’t want the state legislature to take on funding all local governments. “Instead, if there was a limitation, a spending limit set by the state, for all local governing bodies, not just a revenue limitation … but a spending limit, then have those local governments use their surplus,” he said.
You can have a system in Texas where the state is buying down the school M&O property tax to zero, the local governments are buying down their own M&O property taxes to zero, and then we’re essentially getting to no property taxes across the state by focusing on limiting spending.
All that would be left would be the Interest & Sinking Fund property tax rates of local governments, which when debt is retired would no longer be needed.
Hardin cautioned some local governments may have to find alternatives. “Some cities are bigger than others. Some can cope with sales tax, some can’t,” he said. “They would ultimately end up probably having to create a consumption based tax or something else to make sure the local governments were funded.”
However it happened, when property taxes are eliminated, there is no need for appraisal districts. Property taxpayers are no longer caught in the rat race, no longer having more than $580 million of their monies funding appraisal districts, and the property tax-hiking cartel is broken up. “We want to get to a place where eventually there is no need for appraisal districts because we don’t have a property tax,” Quintero said.
Eliminating property taxes will likely be a decades long process, but immediate help can start now. Hardin explained the quickest way to start this process is to unleash the $27 billion surplus the 2023 Texas Legislature has onto school M&O property taxes now.
While the steady march of breaking up Texas’ tax-hiking cartel through property tax elimination goes forward, Hardin said reforms of the appraisal district system could be passed.
Quintero himself offered just such a suggestion. “One of the questions that has kind of lingered in my mind for a little while is why doesn’t Florida have these sorts of problems? Florida has a relatively similar tax system,” he noted. “Back in the mid-1990s, Florida passed an amendment to its constitution called the Save Our homes assessment limitation. What it did is it effectively put into place a 3 percent year-over-year valuation limitation. So that if you’re a homesteader, you only have to worry about a certain level of increase in your appraised value.”
If such a reform were put in place, it is likely that it would be more transparent that local governments, not appraisal districts, hike taxpayers’ tax bills.
Hardin suggested the boards of the appraisal districts, and perhaps the chief appraiser as well, being elected by the voters instead of the current good ole boy network. “Making them an elected office that can be directly held accountable for what they have done in the previous cycle is the easiest and most practical way.”
Chandler Crouch believes that taxpayers should have the option of recalling the appraisal district board of directors. “The taxpayer should be able to hold the appraisal district accountable.”
Hardin also pushed for third-party efficiency audits, and transparency so the taxpayers can see those audits. He also recommended requiring local governments to have to seek voter approval anytime they seek to take more money from you, thus making the no-new-revenue rate more of a default than a potential option.
Quintero agreed with that. ”We would like to see the voter approval tax rate limit reduced from its current 3.5 percent mark for cities, counties, and certain special districts, and 2.5 percent for school districts, down to zero, if possible,” he told Texas Scorecard. “I think we have a significant economic event coming at us, and we’re going to need to do everything possible to protect the integrity of the family budget.”
“Property taxes are unethical and should be abolished,” State Rep. Harrison tweeted on December 14.
But Diane Covey, a retired Denton County property taxpayer, may not have high hopes when it comes to trusting elected public servants. She worked in the state attorney general’s office during the governorship of George W. Bush, and recently retired from working at the City of Fort Worth for 19 and a half years as a public information officer. When Texas Scorecard asked her if she had spoken to her local public servants about her property taxes, she gave this response.
I’m a little bit more of an advantage than most residents and homeowners, or renters for that matter, because I worked for government. I see how the wheels turn, and it leaves a very, very bad taste in my mouth. I was very proud to work for the city. But overall, watching how elected officials work, it’s beyond disappointing.
Indeed, there could be great resistance to trying to rescue taxpayers from the state’s tax-hiking cartel because of all the interests tied up in it.
“I believe the reason we haven’t seen major change in our property tax system, and the reason why things stay the same is because of the property tax industrial complex,” Crouch said. “It’s all of the people and all of the industry that relies on this property tax system that’s keeping it the way it is.”
Tim Hardin agrees. “We have a [state] senator who owns a property tax protest business, who carries most of the legislation about property tax reform, and basically has said that he is against property tax elimination,” he said. “Conflicts of interests are everywhere. It’s the nature of government, which is why we should shrink the size of government.”
But as a reminder, elected public servants answer to citizens, and Texans do have the power to make them move. It was taxpayer outcry that forced the Texas Legislature in 2019 to lower the bar for when most cities and counties have to ask voters for approval to hike their taxes. And in cities like Colleyville in North Texas, it was voters banding together that led to them sweeping the city council and mayor’s office, and to this day they have had five straight years of the city passing the no-new-revenue rate. That is the rate at which the same revenue is collected as the prior year from existing properties.
As has been covered throughout this series, property taxpayers across Texas are crying out because of the oppression of the tax-hiking cartel of local governments, appraisal districts, and the Texas Legislature that set the whole system up.
“I want to challenge everybody to not just think about the next six months in front of us. I want to challenge folks to think about the next 10 years in front of us,” Quintero told Texas Scorecard. “What do we want the tax system to look like a decade from now? Twenty years from now? Fifty years from now? We need to start thinking long term.”
Those tired of the incompetence and abuse of appraisal districts, as well as property taxes in general, are wanting a way out. “The only way to get rid of the appraisal districts is to get rid of property taxes,” Crouch said.