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Texas Property Tax Updates

Updated June 2020

APTC Texas Update

The impact of Covid has been felt all across the world.  The property tax system is no exception.  The following are some observations from Texas.

  • · Covid and 2020 Valuations: For property tax purposes, the valuation date is “as of” January 1 of each tax year. Thus, despite the devastation caused by Covid, its ruinous effects on businesses may not be considered for 2020 property valuations.
  • · Section 11.35 Temporary Disaster Exemption: Governor Greg Abbott has declared the entire state a disaster area.  Section 11.35 of the Texas Property Tax Code provides for a temporary ad valorem tax exemption for property damaged in a disaster.  The applicability of the exemption in the context of Covid, however, has been called into doubt.  In AG Opinion KP-0299, Attorney General Ken Paxton concluded that the exemption does not apply to economic loss caused by the pandemic, reasoning that physical damage to property is required.
  • · Alternative Hearing Procedures: Appraisal Review Boards are responding to social distancing needs by utilizing various types of formal hearings, such as hearings by telephone and video conference.  These appear to comply with due process requirements.  Interestingly, Attorney General Paxton recently opined on these alternative hearing types in AG Opinion KP-0307, ultimately concluding that a taxpayer is entitled to an in-person hearing if it insists on one.  Many counties, including several large ones, are currently holding in-person hearings.   Overall, the hearing process is working effectively, albeit slowly.
  • · Tax Rate Caps: Recent legislation caps ad valorem tax rate increases by cities, counties, and large special districts at 3.5%, unless otherwise approved by voters. This limit, however, does not apply to taxing units located in a Governor-declared disaster area.  Controversy is brewing over whether this cap applies in light of Covid.  Governor Abbott argues that it does, while many taxing units contend that his disaster declaration removes the cap.  More to come.
  • · Rolling 2019 Values: Some taxing units and taxpayers contend that rising appraised values, and thus property tax increases, may be avoided in tax year 2020 by using 2019 appraised values.  Because the valuation date is January 1, 2020 (not January 1, 2019), doing this may run counter to law, others argue.  The property tax burden is not increased by rising appraised values, but rather from the refusal of taxing units to lower tax rates in response. This sentiment was expressed by Governor Abbott, who remarked:

“To that end, I strongly encourage local governments to adopt property tax rates that will not result in an increase in the tax burden. This power is wholly within their control. As you know, local governments—not the State of Texas—set the property tax rates, and they are the ones responsible for an increase (or, ideally, decrease) in property taxes. The state, for example, took the unprecedented step last year in reducing school property tax rates, and requiring those rates to continue to decline as property values increase.”

Covid has undoubtedly disrupted the normal course of property tax administration in Texas.  Despite this disruption, the flexibility built into the state’s system has allowed it to adapt and work efficiently.

Jim Popp
Popp Hutcheson, PLLC
American Property Tax Counsel (APTC)

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