Statement - March/April 2004

Comptroller Strayhorn Releases Property Value Study
Preliminary Value Findings Total $1.06 Trillion

Comptroller's Report

$17.2 Billion in Local School Taxes

2003 School Tax Rates and Taxes

Tables:
School District Taxable Values
Median Appraisal Ratios
Coefficients of Dispersion

(Note: The following article discusses the increase in school district values from the Comptroller’s final 2002 property value study to the preliminary 2003 study, based on information reported by Texas school districts.)

Texas Comptroller Carole Keeton Strayhorn certified the preliminary determination of school property values—based on the appraisal date of January 1, 2003—to Education Commissioner Shirley Neeley on January 30, 2004.

Texas school districts’ preliminary taxable property values totaled almost $1.06 trillion in 2003, an increase of more than 4 percent or roughly $45 billion more taxable value than in 2002. Independent school district (ISD) property values are up for the 11th year in a row, based on numbers from the Comptroller’s property value study (PVS). School property values have continued to rise since the 1992 study findings.

For tax year 2003, taxable values increased about 74 percent—or 779—of the school districts, with an average increase in value of more than 8 percent. In comparison, 819 school districts had an average increase in value of more than 11 percent in tax year 2002.

About 19 percent of the school districts—or 201—had property values increase more than 10 percent from last year. Of these 201 districts, 43 districts saw property values increase more than 20 percent. Six districts had values increase more than 50 percent. The largest percentage increase in value, mainly because of a power plant, was 139 percent in Deweyville ISD in Newton County. In 2002, Mirando City ISD in Webb County had a 398-percent value increase with new mineral production.

Other school districts with percentage increases exceeding 50 percent from 2002 to 2003 included: Anton ISD in Hockley County, 105 percent; Devers ISD in Liberty County, 97 percent; Ricardo ISD in Kleberg County, 78 percent; Nursery ISD in Victoria County, 76 percent; and Runge ISD in Karnes County, 62 percent.

Values dropped in 270 districts by an average of less than 6 percent from 2002 to 2003. In the preceding study, values declined by an average of less than 7 percent in 233 school districts.

Only 51 school districts saw property values decrease more than 10 percent from last year. Ten of these 51 districts experienced more than a 20-percent loss in property value.

Property Value Study

The Education Code requires the Texas Education Agency to use the Comptroller’s annual estimates of individual school district taxable wealth to determine state aid payments. Copies of the Comptroller’s findings may be obtained by ordering the agency’s School and Appraisal Districts’ Property Value Study – 2003 Preliminary Report. Individual school and appraisal district findings are available on the Comptroller's Web site at www.window.state.tx.us/taxinfo/proptax/pvs03p/. The Comptroller automatically sends a copy of the preliminary report to each county appraisal district, school district, county tax office and certain taxpayers.

While there are 1,031 school districts, the Comptroller’s certification is for 1,049 districts because some school districts’ values are divided among more than one appraisal district.

For questions about the preliminary PVS results, send an e-mail to the Comptroller’s Property Tax Division (PTD) at ptd.cpa@cpa.state.tx.us or call 1-800-252-9121, ext. 5-9839. In Austin, call (512) 305-9999.

School districts, appraisal districts and some taxpayers (with significant property in the study) had until March 10 to appeal the study’s preliminary findings. Final taxable values, which are certified on or before July 1, 2004, may be less than those listed in the preliminary study because of appeals and corrections filed with the PTD.

The Comptroller certified the school district’s local tax roll values in 1,010 of the 1,049 school districts. They accounted for about $1.048 trillion in taxable value, or about 99 percent of the total taxable value in Texas.

The preliminary findings had 143 of these 1,010 school districts within the new “grace period” provided by Senate Bill (S.B.) 671. These 143 districts represent about $156 billion in taxable value. S.B. 671 provides a two-year reprieve to certain school districts from the funding effects of state value findings in the annual study. The new law requires the Comptroller to conduct a mandatory appraisal standards review of the appraisal district with school districts under the “grace period.” See the November 2003 STATEMENT article for more information about S.B. 671 and the mandatory review.

S.B. 671 also eliminates the practice of allowing school districts whose local values exceed the state’s value finding from receiving a state value determination for purposes of school funding. Some 61 school districts with almost $6.9 billion in taxable value fell in this group and were certified with their higher local taxable value, rather than the lower state value finding.

In 39 of the 1,049 districts, local tax roll values did not meet the agency’s criteria (5-percent margin of error) or the new grace period. The Comptroller certified the state value determination for those 39 districts at almost $11.3 billion.

Largest school districts

Of the state’s 50 largest school districts in taxable wealth, 42 ISDs saw increases in their taxable values. Houston ISD, the state’s largest district with taxable wealth of more than $71 billion, had property values increase more than 4 percent from 2002. Dallas ISD, the second largest district, totaled $57 billion in property value, a less than 1-percent drop from last year’s tax base.

For the third year in a row, the largest percentage increase in taxable value was in Frisco ISD in Collin County, with more than a 20-percent increase. Frisco ISD increased 31 percent in 2001 and 25 percent in 2002. Frisco ISD’s tax base grew from $4.5 billion in 2001 to $5.6 billion in 2002 to $6.7 billion in 2003. Frisco ISD was the only ISD of the 50 largest districts with a value increase at or exceeding 20 percent.

Other than Frisco ISD, five of the 50 largest districts saw taxable values increase at or greater than 10 percent. They include Cypress-Fairbanks ISD in Harris County, 18 percent; Mansfield ISD in Tarrant County, 14 percent; Keller ISD in Tarrant County, 13 percent; Denton ISD in Denton County, 11 percent; and Katy ISD in Waller County, 10 percent.

Conversely, eight of the 50 largest districts saw a decline in taxable values from 2002. Carrollton-Farmers Branch ISD in Dallas County saw the largest percentage loss in taxable value of just under 6 percent, from $13.2 to $12.5 billion.

The 10 largest school districts in taxable wealth account for about 28 percent of all the state’s property value. These 10 districts in order of value are: Houston, Dallas, Austin, Plano, Cypress-Fairbanks, Arlington, North East, Fort Worth, Northside and Lewisville ISDs. (North East and Northside ISDs are both in Bexar County.) Nine of these districts repeat as the top 10 largest districts from last year; Lewisville ISD replaces Richardson ISD on the list.

Exemptions

According to preliminary study results, school districts’ exemptions and abatements increased more than 2 percent from the final 2002 study to the 2003 preliminary study. The total 2003 amount exceeded $148 billion and was more than $3 billion above 2002.

Homestead exemptions accounted for about 86 percent of all exemptions. Those exemptions include the state mandated $15,000 exemption for general homeowners, the state-mandated $10,000 exemption for disabled or elderly homeowners, the school tax ceiling (or freeze) for over-65 homeowners, the capped value on homesteads and the deferred homestead payments.

Government Code Section 403.302 specifies the exemptions and productivity value loss for special appraisals that the Comptroller deducts from market value to determine the taxable value of property in school districts.

Property categories

The preliminary 2003 study, before exemptions, revealed an increase of more than 8 percent in the value of single-family residences, following an increase of almost 11 percent in 2002 and 12 percent in 2001. This category is the largest in appraised value, representing 49 percent of the total school district appraised values. Ten years ago, in the 1994 PVS, this category represented 40 percent of the total school district values.

Multi-family residences values increased more than 3 percent in 2003, following a 6-percent increase in 2002.

Changes in business properties’ values varied, depending on the type. Commercial real property increased about 3 percent, following an increase of 4 percent from last year. Industrial real property saw appraised values decrease more than 2 percent, following less than a 1-percent increase in 2002.

Industrial personal gained slightly more than 1 percent, compared to a 3-percent decrease in 2002. Commercial personal stayed almost flat, with less than a 1-percent increase, the same increase as in 2002.

Utilities decreased more than 5 percent in value from 2002 to 2003, after increasing almost 5 percent in 2002.

Oil, gas and minerals have seen both ups and downs in recent years. After double digit increases of 14 percent in 2000 and 56 percent in 2001, this category dropped for the second year in a row by more than 3 percent. It dropped almost 8 percent in value in 2002.

Residential inventory, which is residential property held for sale by the developer, experienced a third year of increase in value by more than 16 percent. The increases were more than 22 percent in 2002 and 56 percent in 2001.

Special inventory, which is inventory value of motor vehicle, boat, heavy equipment and manufactured housing that dealers are required to report to appraisal districts and county tax offices, decreased about 2 percent, after a 10-percent increase in 2002.

Intangible personal and uncertified property included miscellaneous properties listed on the local tax rolls but not certified by local appraisal review boards at reporting time. With updated information during the appeals process, Comptroller staff will distribute the certified values among other property categories.