My friend Cheryl Johnson serves as tax assessor/collector for Galveston County, a position she has used to champion the rights of taxpayers. She recently penned an op-ed that proposes changing the current appraisal-driven property tax system to one where your liability is based solely on the acquisition price.
Her recommendation should be carefully considered. Of course, her proposal doesn’t remove the overwhelmingly negative problems associated with the property tax. It also doesn’t account for some of the peculiar variables that can go into the sales price which shouldn’t affect someone’s tax burden for years to come. (We’ve taken the position that it is time to consider eliminating property taxes; tinkering with the system may be the outcome of the debate, but our goal should be to get rid of it.)
On the other hand, she has found a way to save taxpayers around $300 million a year — which is nothing to sneeze at. And, at a minimum, taxpayers would be served by eliminating the black-box government appraisal system.
Taxed Into Awareness
By Cheryl Johnson
Galveston County tax Assessor/Collector
Every year county appraisal districts mail notices of appraised value changes to millions of property owners across the State which prompts protests by unhappy taxpayers. Even with fewer values than usual increasing in Galveston County this year, hundreds of property owners attended classes to learn how to be effective in the protest process. I know because I taught those classes and attendees confirmed what seems to me to be obvious — the system needs to be changed.
In 2006, the Governor’s Task Force on Appraisal Reform traveled the state collecting information on problems associated with our current property tax system. Today, interim committees in both the Senate and House are studying the same issues. Why? Because many property owners are still mad (even after enormous reductions in school district tax rates) because their values increased and it became apparent that savings would be temporary at best. Sadly, few are willing to take a leadership position in order to establish a permanent remedy—it is easier to study and debate the issue than it is to correct it. What a waste of time and money—their time, our money.
The solution is simple—adopt a property tax system based on acquisition rather than market value. Starting with current values as a base, values would change when sold to the sale price. To provide for inflation (or recession), values could increase (or decrease) annually based on the rate of inflation (or recession) or 2%, whichever is less. The limit should not apply in certain circumstances such as when additions are made to properties or in the event of catastrophic losses. Seniors and the disabled must be allowed to retain their current tax benefits and, in the interest of maintaining community stability, families should be allowed to transfer their homestead property to heirs without a change in base value (as long as it remains a homestead).
The result? Taxpayers are no longer angry each spring because appraisal notices will not be arriving in the mail. Legislators stop hearing complaints from constituents and can finally get on with important State policy decisions. Fiscally, in excess of $300M paid by local governments to fund appraisal districts will no longer be needed. The Comptroller’s Property Value Division would no longer be conducting ratio studies and school districts would cease spending thousands of dollars defending failed ratio studies. The result? Less government and lower taxes.
Is an acquisition value system fair, uniform, and Constitutional? Yes. It provides predictability for property owners, increases community stability, and everyone is treated equally (after the initial assessment at the time the law takes effect). The United States Supreme Court in Nordlinger v. Hahn, 505 U.S. 1 (1992) presents compelling arguments to support the constitutionality of an acquisition value tax system.
Statewide, voters overwhelmingly support changing our current system and the time has come for permanent and sustainable change. Let’s solve the problem instead of placing yet another temporary Band-Aid on a gapping wound. We deserve a better system than the one we have today. We have been taxed into awareness and we want solutions…now.