Appraisal District Operations Report
2006 and 2007 Data
Before the county appraisal districts (CADs) were created in 1981, thousands of local taxing units were responsible for appraising property and assessing taxes independently, resulting in wide disparities in values. As the state began to rely more on local property taxes to fund public education and to base state aid to school districts on local property values, centralized local appraisal became necessary to ensure equal treatment of taxpayers. The CAD system greatly improved equity in property taxation and school funding, though there are still wide differences in the individual characteristics of CADs.
Each year the Property Tax Assistance Division (PTAD) surveys the state’s 253 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. The differences in responses reported in the PTD’s annual survey reflect the CADs’ diversity. 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.
This year, eight CADs did not participate in the survey – Cherokee, Edwards, Hunt, Jasper, Kleberg, Mason, Motley and Wilson. The data reported in this report, therefore, reflects information only from the CADs that responded to the survey. Since the number of reporting CADs differs from year to year, this report makes no comparisons to prior years’ numbers.
The Comptroller makes CAD information available for use by legislators, local taxing entities, taxpayers, news media, state agencies and appraisal districts. PTD uses the information to project legislative fiscal estimates, to provide background for Appraisal Standards Reviews (ASRs) and as a data source for the PTAD’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 www.window.state.tx.us/taxinfo/proptax/ador0607/. The following is a summary of the information compiled by PTAD for 2006 and 2007.
A board of directors, selected by the taxing units within the CAD, governs each CAD. The directors hire the chief appraiser and select appraisal review boards (ARBs) that review taxpayer protests and taxing unit challenges to property appraisals.
Appraisal District Boards
The board of directors establishes the CAD’s goals and policies. Texas has 1,533 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 35 percent, or 537 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 and elect them.
Property Tax Code Section 6.03 requires that, if a taxing unit does not appoint the county tax assessor-collector to the CAD board, 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 with another taxing unit to collect county taxes, the county tax assessor-collector is ineligible to serve on the CAD board.
CAD boards in 212 districts have legal counsel on retainer to advise them concerning legal issues that may arise in the context of CAD operations, while 29 reported they do not have legal counsel and four did not respond to the question. CADs reported that 193 boards purchase liability insurance for errors and omissions on the tax roll.
Thirty-five CADs have a taxpayer liaison, of which 21 are paid. Nineteen tax liaisons are CAD employees, while 16 are not.
Appraisal Review Boards
Appraisal review boards (ARBs) are separate entities appointed by CAD directors to handle taxpayer protests and taxing unit challenges. In 2006, CADs appropriated $4.1 million for ARB operations, with an average of $17,492 per CAD.
Each CAD’s board of directors determines the number of ARB members to appoint above the statutory minimum of three members. For tax year 2006, CAD boards appointed 1,524 ARB members for an average of six members per CAD. Some 20.9 percent, or 319 of the members, were newly appointed. Two hundred twenty-eight CADs reimburse ARB members for time and travel expenses. Seventy-nine CADs provide the ARB with an attorney, while 158 do not. Eight CADs that responded did not answer this question on the survey.
Three CADs provide the ARB with its own full-time support staff. One CAD assigned four full-time employees to the ARB and the others each have one full-time employee assigned. In CADs without a full-time ARB staff, 586 CAD staffers assist the ARB during the review process.
Agricultural Advisory Boards
Property Tax Code Section 6.12 requires the chief appraiser, with the advice and consent of the CAD’s board, to appoint three or more members to an agricultural advisory board. The agricultural advisory board advises the chief appraiser on the appraisal and use of land designated for agricultural, open space or timberland appraisal.
Agricultural advisory boards, with 755 members, are active in 195 CADs. The average board had four members.
Each CAD’s board of directors approves an annual operating budget. Final 2006 CAD operating expenses totaled $299.8 million. CADs’ approved budgets for 2007 total $321.3 million, a planned increase of 7.2 percent. CADs indicated they had accumulated $16.7 million in surplus funds. This represents 5.6 percent of 2006 budgets.
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 budget adopted by the CAD’s board of directors. Taxing units in one CAD vetoed their 2006 budget, as allowed by Property Tax Code Section 6.06.
CADs spent $14 million, or $66,151 per CAD, on outside contracts. Most of these contracts were for appraisal services. CADs also spent $2.5 million for training, or about $10,504 per CAD.
Chief appraisers oversee CAD staff and operations. Employment arrangements within the CADs vary with the CAD’s 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 $58,677 annually.
Full-time CAD employees numbered 4,348 in 2006. Professional appraisers totaled 1,729, or 39.8 percent, of full-time CAD employees. Salaries for CAD appraisers in 2006 on average ranged from $26,179 to $40,180.
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 2,157 of their employees have certifications issued by BTPE. Statewide, 1,338 appraisers have obtained the RPA designation, 251 are registered Texas assessors-collectors, 102 are registered tax collectors and 109 individuals have all three designations.
Some 225 CADs provide staff with retirement benefits, while 216 provide medical insurance.
CAD Appraisal Work
State law requires CADs to reappraise property in their districts at least once every three years. Many CADs reappraise property every year. For the 2006 tax year, 162 CADs or 68.5 percent, reported reappraisals, while 32 CADs reappraised in 2007 and 30 in 2005. Fifteen CADs had not performed a reappraisal within the prior three years and six did not respond to the question. Another 129 plan to reappraise in 2007, 53 in 2008 and 20 in 2009. One CAD indicated it planned to reappraise in 2006, three said they would reappraise in 2010 and 47 did not indicate a year for their next reappraisal.
In their last reappraisal, 177 CADs used both in-house staff and an outside appraisal firm. In the remaining districts, 50 CADs used staff only and 18 CADs used appraisal firms alone for the reappraisal.
Taxpayers are required to annually 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 744,561 renditions, or 3,384 per CAD. Of those renditions filed, CADs reported that 619,369 were renditions for business personal property totaling $184.6 billion in taxable value.
Appraisal Notices, Taxing Unit Challenges and Taxpayer Protests
Under certain conditions, CADs are required to mail notices of appraised value to taxpayers by a certain time each year. If the owners’ property values are higher than the previous year, higher than the owners’ rendered value, or new to the appraisal roll, the CAD 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 in the preceding year, has changed ownership or the owner requests a notice.
CADs mailed 9.7 million notices of property value in 2006. In response to those notices, property owners filed 1 million written protests. Of these protesting taxpayers, 627,089 met with CAD staff in informal hearings to attempt a settlement. ARBs scheduled 512,451 formal hearings. More than a quarter, 38.6 percent or 198,054, of the taxpayers were “no shows” for their scheduled hearing.
Taxing units also may file written challenges to the ARB if they disagree with certain CAD decisions. In 2006, only one taxing unit filed a challenge.
After an ARB approves the appraisal records, it may change the records for specific reasons set forth in Property Tax Code Sections 25.25 and 41.411. In 2006, the most common late changes were for “inaccurate changes,” while the category of late changes with the most value was “one-third over appraisal” (Table 1).
|Reason Late Filed Protest||Number of Properties||Value of Properties|
|No Notice Given||4,016||$1,345,929,804|
|Inclusion of Property||4,300||$185,034,428|
|One-Third Over Appraisal||5,640||$2,625,436,720|
Source: Texas Comptroller of Public Accounts, 2006-07 Appraisal District Operations Surveys
Other reasons for changes include:
- correction of property incorrectly included on the appraisal roll;
- clerical errors, multiple appraisals of the same property;
- failure to send notice of property value;
- to lower an incorrect appraisal that exceeds the correct value by more than one-third; and
- changes that require the chief appraiser and taxpayer to agree jointly that the ARB should correct the tax roll.
Post-protest Legal Action
Property owners who disagree with the ARB’s decision on their property may file suit in district court or, in some cases, seek binding arbitration. As of the survey’s reporting date, taxpayers had filed 5,673 lawsuits challenging their 2006 values. CADs reported that 38 lawsuits filed relating to 2006 values were resolved through non-binding arbitration. These involved property valued at $52.2 million. Another 1,999 lawsuits were still pending for tax years prior to 2006, with a combined value of $15.5 billion.
Assessing and Collecting
While all CADs appraise property, some CADs have the additional duties of assessing or collecting property taxes. In 2006, 132 CADs calculated effective and rollback tax rates for 970 local taxing units; 71 published required notices of proposed tax increases by 441 taxing units; and 116 prepared and mailed tax bills for 842 taxing units.
One hundred seventeen CADs collect taxes on behalf of 947 taxing units. They budgeted $16.1 million for the function, or an average of $150,209 per CAD performing collections.
Facilities and Computers
CADs may own property for use as office space. In 2006, 151 CADs owned office space. Seventy CADs leased office space, 40 from a taxing entity and 30 from private owners. Twenty-four CADs enjoyed free use of office space.
Of the CADs that owned property, 113 owned it free and clear while 38 continued to make payments. The average number of years for repayment was 13 and the average interest rate on the loans was 5.4 percent.
Most CADs indicated they are computerized. Only 12 said they did not comply with the Comptroller’s electronic appraisal roll submission rule. Nine did not comply with the Comptroller’s statewide sales submission requirements.
The number of CADs with a geographic information system (GIS) totaled 159. Reporting CADs had entered 79.7 percent of their appraisal records in the GIS. Six CADs with a GIS had not yet entered appraisal records into the system. Eighty-four CADs did not have a GIS and two CADs did not answer this question on the survey.
Our office’s Property Tax Assistance Division (PTAD) produces publications that may be helpful to taxpayers, taxing entities and county appraisal districts (CADs). Some CADs also mailed the Comptroller’s office a copy of their 2006 appraisal budget, and some CADs that collect taxes provided copies of their 2006 collection budgets. To request any CAD’s survey response, appraisal budget or collection budget, please send an e-mail to email@example.com or call the PTAD’s technical assistance hotline at (800) 252-9121. In Austin, call (512) 305-9999.
In a separate survey, PTAD obtained information to update names and addresses of CAD directors, Appraisal Review Board members and chief appraisers. This information is contained in the 2007 Appraisal District Directory, available only online at www.window.state.tx.us/taxinfo/proptax/apprdir07/.
All PTD publications are available for viewing on the Comptroller’s Web site at www.window.state.tx.us/taxinfo/proptax/.