Local government officials and social activists groups marked Monday, the first day individuals and commercial interests can challenge their 2018 property tax appraisals, with a call to fix a process they say has cost Dallas County local governments more than $1 billion in revenue since 2013.
"We are ready to start a conversation on our property tax system that includes homeowners, teachers, healthcare workers, construction workers, union members, small business owners and the communities that can no longer afford to live here," said Diana Ramirez with the Workers Defense Project.
Texas law allows owners who disagree with their property's appraised value to file a protest with their appraisal district. Over the last five years, the Dallas County Appraisal District has approved value reductions costing entities that receive property tax cash like Dallas ISD, the City of Dallas, Parkland Hospital and Dallas County more than $100,000,000 each. Most of those savings, about 83 percent, have gone back to owners of commercial property, despite commercial property making up less than half of total market value within the county.
The biggest issue keeping commercial property owners from paying their fair share of taxes is state law, said Dallas County Judge Clay Jenkins. Texas is one of 13 states that does not require disclosure of the price of any property sold in the state. While individual housing transactions are easy for the appraisal district to look up thanks to Dallas' multiple listing service, corporate transactions are much harder to track.
Before 1997, commercial property owners seeking to lower a valuation had to hire independent experts to argue to the appraisal district that their property had been priced unfairly, an expensive and time-consuming process. After a change in Texas law that year, however, owners have been allowed to cherry-pick a list of what they believe are properties similar to the ones they own and ask that their property be assessed at the median value of the list. With the help of an expensive tax attorney and the lack of data about other corporate transactions, they're often successful.
“We have seen an increase in the percentage paid by homeowners and a decrease in the percentage of property taxes paid by commercial property owners over the last decade," Jenkins said in a press release. "Special interest loopholes and lack of sales price disclosure have allowed commercial owners to pay less than their fair share of taxes and increased the taxes of all homeowners."
Dallas City Council member Philip Kingston said Monday that the problem isn't Dallas' development boom, it's those who have snatched up real estate for other reasons.
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"It's not the development interests that are the problem, it's land speculators," Kingston said. "It's people who are not contributing to the economy in any appreciable way. Instead, they're sitting on valuable property that should be returned to development uses."
Without reform, Dallas workers will be forced to live farther and farther away from their jobs in areas with high property taxes, while seeing funding for vital services like education and hospitals continue to decrease, activists said.
"We need more investment in our communities and we hope that we build a more transparent process in our property tax system and we encourage large commercial property owners to pay their fair share,” Dallas AFL-CIO Secretary Treasurer Mark York said.
Bills to require the disclosure of all real estate sale prices and to hold commercial owners to the pre-1997 property tax appeal standard are currently languishing in committee in the legislature.