Appraisal District Operations Report
2005 and 2006 Data
Each year, as required by Section 5.09, Tax Code, the Texas Comptroller’s Property Tax Division (PTD) surveys the state’s 253 central and county appraisal districts (CADs) for information about their operations. The CADs provide final data about their operations from the prior tax year and projected data on budgets and plans for the current tax year. This year, three CADs declined to participate in the survey.
2005 and 2006 Data
(XLS, 3.1 MB)
The Appraisal District Operations Report is also available as a PDF.
If you do not already have it, you will need to download Adobe Acrobat Reader to view and print the PDF file.
The Comptroller provides the operations report to the Governor, Lt. Governor and each member of the Legislature. In addition, the Comptroller makes CAD information available for use by legislators, tax officials, taxpayers, media and state agencies. PTD uses the information to project legislative fiscal estimates, to provide background for Appraisal Standards Reviews (ASRs) and as a data source for the PTD’s Annual Property Tax Report. CADs use this benchmark information to compare their own operations to those of other CADs. Full details reported by the CADs are available on the Comptroller’s Web site at http://www.window.state.tx.us/taxinfo/proptax/ador0506/.
Before the establishment of the CADs in 1981, thousands of taxing units appraised property and assessed taxes independently, resulting in wide disparities in values. As the state began to rely more on local property taxes to fund public schools, and to use school district property values as a measure of wealth to calculate state aid to school districts, centralized local appraisal became necessary to ensure equal funding of school districts.
The resulting system of CADs has greatly improved equity in property taxation and school funding, though there are still wide differences in the individual characteristics of CADs. Appraisal districts range greatly in size and composition across the state. The differences in responses reported in the PTD’s annual survey reflect the diversity of the CADs and the state itself. While the range in the survey results makes generalized observations difficult, the results demonstrate the massive job CADs do each year, how local taxing units benefit from this work and the complexity of the CADs’ daily operations.
In 2005, Texas CADs appraised 16.6 million pieces of property in 3,868 taxing units. This was 170,213 more properties than were appraised in 2004, a 1.0 percent increase. The CADs performed this task with operating expenses of $282.7 million, a 1.2 percent increase from 2004. The result of these appraisals was a reported $1.6 trillion of property value. In contrast, in 2004 appraised property totaled $1.5 trillion.
The work of an appraisal district is to appraise property within its boundaries. A CAD’s workload increases with the number and kinds of properties it must appraise.
Almost half of Texas’ taxable property accounts are concentrated in 25 of the 253 CADs. Each of these 25 CADs appraises more than 150,000 parcels.
The nine largest CADs handled 30 percent of all the taxable property accounts in the state. These nine districts have more than 300,000 accounts each and include Harris, Dallas, Tarrant, Bexar, El Paso, Travis, Denton, Hidalgo and Panola CADs.
Optional Property Categories
There are a few categories of property that taxing units have the authority to tax or to exempt, such as freeport property, non-income producing personal property and vehicles leased for personal use.
The Texas Constitution, Article VIII, Section 1-j, defines freeport property as goods, wares and merchandise (other than oil, gas and petroleum products) that leave Texas within 175 days of the date they are brought into or acquired in the state. Counties, cities, school districts and junior college districts may tax or retain the right to tax freeport property. Other special districts must exempt freeport property.
As a general rule, a person is entitled to an exemption from taxation of all tangible personal property, other than manufactured homes, that the person owns and that is not held or used for production of income. However, taxing units may tax non-income producing personal property, if the units follow certain hearing and notice requirements set out in Texas Property Tax Code Section 11.14.
Motor vehicles leased for personal use after January 2, 2001, may be exempt from property taxes. Texas Tax Code Section 11.252 defines these vehicles as passenger cars or trucks with a shipping weight of less than 9,000 pounds. The law defines personal use as using the vehicle more than 50 percent of its mileage for activities that do not involve the production of income.
A city, however, may continue to tax personal leased vehicles, if the city adopted an ordinance to do so prior to January 1, 2002.
The taxing units within a CAD are the entities that assess and collect property tax revenues for services provided within the CAD. The most familiar of these are the school districts, cities and counties, but there can also be special purpose districts such as health care, community colleges or utilities.
Each year, some taxing units cease to exist and communities form others in response to local needs. Survey results indicate that there were 3,868 taxing units in 2005 in Texas that imposed local property taxes. Although some taxing units dissolve each year, generally the trend is for the number of taxing units to increase each year. For the first time in six years, CADs reported fewer taxing units in the survey. Some of these taxing units serve taxpayers in more than one CAD.
A board of directors, selected by the taxing units within the CAD, governs each CAD. The directors in turn select appraisal review boards (ARBs), which review taxpayer challenges to property appraisals and review and approve the appraisal roll.
Appraisal District Boards
The board of directors establishes the goals and policies of the CAD and is responsible for selecting the chief appraiser and approving the members of the agricultural advisory board. Texas has 1,525 CAD directors, with an average of six members on each CAD board.
Most board members are citizen appointees of the taxing units in the CAD, but 46.5 percent, or 708 directors, are taxing unit officials—that is, they are county tax assessor-collectors, school board members, county judges, county commissioners, city council members or other elected officials. They represent the interests of the respective taxing units that appoint them.
Texas Property Tax Code Section 6.03 requires that if a taxing unit does not appoint the county tax assessor-collector to the CAD board, then the county assessor-collector serves as a non-voting CAD director. If a county tax assessor-collector, however, serves as the chief appraiser or if the county commissioners court contracted for county taxes to be collected by another taxing unit, the county tax assessor-collector is ineligible to serve on the CAD board.
CAD boards in 210 districts have legal counsel on retainer to advise them on disputes that may arise regarding the valuation of properties. CADs reported that 200 boards purchased liability insurance for errors and omissions on the tax roll.
Appraisal Review Boards
Appraisal review boards (ARBs) are separate entities appointed by the CAD board of directors to review and approve the appraisal roll and determine taxpayer protests and taxing unit challenges. Each CAD’s board of directors determines the number of ARB members to appoint, with a minimum of three members.
For tax year 2005, there were 1,530 ARB members, up from 1,504 in 2004. Some 22.5 percent, or 344 of the members, are newly appointed. That compares to 330 new ARB members in 2004. ARBs average six members on the board.
Each CAD’s board of directors approves an annual operating budget. Final 2005 CAD operating expenses totaled $282.7 million, or an average of $16.99 per parcel. The average 2005 CAD operating budget exceeded $1.1 million, 3.3 percent more in expenses than in 2004.
The 2005 expenditures for individual CADs vary by size and type of property appraised. The lowest cost per appraisal was Hansford CAD at $1.73. At the other end, Somervell CAD reported the highest cost at $55.43 per appraisal. This range in operating costs per appraisal reflects the type of property each CAD appraises. Somervell CAD, for example, is home to the Comanche Peak nuclear facility and has a high concentration of industrial property that requires great expertise to appraise, which the higher appraising costs in Somervell reflects.
Local taxing units pay CAD expenses according to the proportion of their property tax levy to the total property taxes levied by all the taxing units in the CAD. Since local taxing units fund CAD budgets, the taxing units may veto the CAD budget adopted by the CAD’s board of directors if requirements of Tax Code Section 6.06(b) are met. Taxing units in five CADs vetoed their 2005 budget, as allowed by Texas Property Tax Code Section 6.06.
Chief appraisers, who oversee a staff of professional appraisers, administrative and support personnel and sometimes one or more computer programmers administer most appraisal districts. Employment arrangements within the CADs vary with the CAD size and workload. The largest CADs commonly have as many as 200 staff members, while a small CAD may employ only part-time appraisers or contract for appraisal work. The chief appraiser may perform the appraisals in these small districts. On average, chief appraisers earned $52,704 annually in 2006, down 4.1 percent from 2005’s average of $53,000.
Full-time CAD employees numbered 4,271 in 2005, compared to 4,195 in 2004. Professional appraisers total 1,592, or 37.3 percent, of full-time CAD employees. Salaries for CAD appraisers in 2005 on average ranged from $25,691 to $39,494. The highest paid appraisers earned about 3.9 percent more in 2005 than 2004.
Appraisers must be registered with the Board of Tax Professional Examiners (BTPE) and must either be a registered professional appraiser (RPA) or be enrolled in training to become one within five years of their employment as an appraiser. CADs reported that 2,244 of their employees had certifications issued by BTPE. Statewide, 1,337 appraisers have obtained the RPA designation, 253 are registered Texas assessors, 126 are registered tax collectors and 124 individuals have all three designations.
Some 242 CADs provide staff with employment retirement benefits, while 228 provide medical insurance.
State law requires CADs to reappraise property in their districts at least once every three years. Many CADs reappraise property every year. For the 2005 tax year, 163 CADs, or 64.5 percent, reported reappraisals, while 27 CADs planned to reappraise for the 2006 tax year.
In their last reappraisal, 182 CADs used both in-house staff and an outside appraisal firm for their reappraisal. In the remaining districts, 50 CADs used staff only and 16 CADs used appraisal firms alone for the reappraisal. Two CADs, in addition to those not returning the survey, did not respond to this question.
Effective January 1, 2004 Texas Property Tax Code Section 6.025 required chief appraisers to agree to one appraised value for any property located in overlapping appraisal district boundaries. If the appraisers do not agree by May 1, then each chief appraiser must set the value at the lowest appraised value determined. Most CADs had taxing units with boundaries in other counties and therefore had property overlapping an adjoining CAD. Only six reported that they did not. CADs that overlap must contractually agree to work together on setting one value on these properties.
Taxpayers are required to report the value of income producing tangible personal property and may report the value of other property—a process called “rendition.” CADs reported that property owners filed 702,669 renditions, down from 817,028 in 2004. Of those renditions filed, CADs reported that 576,935 were renditions for business personal property totaling $172.1 billion in taxable value.
Appraisal Notices and Taxpayer Protests
Under certain conditions, CADs are required to mail notices of appraised values to taxpayers by a certain time each year. If the owner’s property values are higher than the previous year, higher than the owner’s rendered value, or new to the appraisal roll, the taxing unit must mail a notice containing the proposed taxable value and the estimated taxes. A shorter version with no estimated taxes is required if none of the above conditions are met, but the property has been reappraised, has changed ownership, or the owner requests a notice.
CADs mailed 9.5 million notices of property value in 2005, including 8.3 million long notices and 117,239 short notices. In response to those notices, property owners filed 855,245 written protests, 9.0 percent more than the 784,727 filed in the previous year on 2004 values.
Of these protesting taxpayers, 475,942 met with CAD staff in informal hearings to attempt a settlement. ARBs scheduled 472,537 formal hearings, an increase of 50,995 hearings or 12.1 percent more hearings than in 2004. Almost a quarter, 24.6 percent or 116,054, of the taxpayers were “no shows” for their scheduled hearing.
Taxing units also may file written challenges to the ARB if they disagree with CAD decisions. In 2005, 13 taxing units—compared to 11 in 2004—filed challenges.
After an ARB approves the appraisal records, it may change the records under specific circumstances set forth in Texas Property Tax Code Sections 25.25.
In 2005, the most common late changes were for “one-third over-appraisals” allowed by Section 25.25(d), Tax Code, Exhibit 6. Property owners may request a Section 25.25(d) hearing for the ARB to lower an incorrect appraisal that exceeds the correct value by more than one-third. Other changes include the correction of property incorrectly included on the appraisal roll; clerical errors, multiple appraisals of the same property; failure to send notice of property value; inaccuracies that do not increase the amount of taxes; and changes that require the chief appraiser and taxpayer to agree jointly that the ARB should correct the tax roll.
Property owners who disagree with the ARB’s decision on their property may file suit in district court or request binding arbitration. As of the survey’s reporting date, taxpayers had filed 4,296 lawsuits challenging their 2005 values, compared to 3,682 lawsuits at the same time in the previous year. The number of lawsuits filed is increasing faster than the growth in property appraisals. This prompted the Legislature to adopt a law that offers taxpayers the option to enter into binding arbitration as an alternative to litigation. As of 2005, property owners now have the option of binding arbitration to challenge the opposed value of real properties with values of $1 million or less.
CADs reported that 13 lawsuits filed relating to 2005 values were resolved through non-binding arbitration. Another 3,480 lawsuits were still pending for tax year 2005 and prior years.
Assessing & Collecting
While all CADs appraise property, some CADs have additional duties for assessing or collecting property taxes. In 2005, 112 CADs also performed the assessing functions, including calculating effective and rollback tax rates, publishing required notices and preparing tax bills.
PTD produces a number of publications that may be helpful to taxpayers, taxing entities and CADs. Many CADs also mailed the Comptroller’s office a copy of their 2005 appraisal budget, and some CADs that collect taxes provided copies of their 2005 collection budgets. To request any CAD’s survey, appraisal budget or collection budget, please send an e-mail to the Comptroller’s PTD at email@example.com or call the PTD’s technical assistance hotline at 1-800-252-9121. In Austin, call 305-9999.
PTD also uses CAD surveys, to update names and addresses of CAD directors, ARB members and chief appraisers. This information is contained in the Appraisal District Directory 2005, now in a more compact version. County appraisal districts and county tax offices receive complementary copies of this directory. Anyone, however, may purchase the directory by sending a check or money order for $10 to:Comptroller’s Property Tax Division
P. O. Box 13528
Austin, Texas 78711-3528
All PTD publications are available for viewing on the Comptroller’s Web site at www.window.state.tx.us/taxinfo/proptax/.
Reasons for Changing ARB Appraisal Record
|Reason for Filing Late Protest||Number of Properties||Value of Properties|
|No Notice Given||6,523||$1,934,390,253|
|Inclusion of Property||2,481||$191,587,749|
|One-Third Over Appraisal||5,061||$1,594,210,462|
Source: Texas Comptroller of Public Accounts, 2005-2006 Appraisal District Operations Surveys.