Then There's This: County Folds on Tax Fight

Buck Wood

The great tax equity revolt of 2014 was fun while it lasted.

After weeks of homeowners airing their grievances over rising residential tax bills, and Travis County officials hinting they may go to war over the undervaluation of commercial properties, the big build-up to the county crusade for justice fizzled into nothingness Tuesday afternoon.

On a vote of 4-0, with Commissioner Margaret Gómez absent, County Commissioners nixed filing a petition with the appraisal district to protest the 2014 commercial property tax roll. Instead, commissioners decided to study the commercial appraisal process and work with the Legislature and other jurisdictions to try to change a lopsided law that favors large commercial properties, which on average are appraised at about 60% of their value.

"One challenge in a single year does not fix structural problems with the law itself," Commissioner Bruce Todd said in making the motion to forego a petition. "This issue needs a process that will lead to a strategy for success." He pointed to a staff analysis that found that even with an increase of $1 billion to the current commercial property roll, homeowners would only save an average of $10 on their tax bills.

It's uncertain what, if any, impact the county commissioners' vote will have on the City Council's decision when it considers a similar proposal today (Thursday, June 12).

The first clue that the commissioners had already thrown in the towel came when Leroy Nellis, the county's recently retired budget guru who had been summoned back to duty on this issue, was the first to be called to offer his recommendation. "I believe a challenge does not get you to where you need to be," he said, suggesting commissioners follow Sen. Kirk Watson's lead "and get behind his recommendations."

It happens that Watson wants to lead the charge for property tax reform in the 2015 Lege, with changes that range from requiring sales price disclosures on commercial properties to encouraging more jurisdictions to provide homestead exemptions at the allowable maximum of 20% (looking at you, Austin).

In a hearing preceding the vote, homeowners urged commissioners to contest the 2014 commercial property tax roll, while a smaller number of real estate reps warned against pursuing a challenge. "This is scapegoat politics at its worst," said Nancy McDonald, director of regional outreach at the Real Estate Council of Austin. A representative of the Building Owners and Managers Assoc­i­a­tion called the proposed challenge "an impulsive response to public pressure."

Bucking the System

Buck Wood, an Austin taxation and election attorney, offered the most aggressive argument for waging a challenge, most significantly because residential taxpayers are subsidizing larger commercial properties – a long-standing practice he called "unconscionable."

"The idea that you're going to try to punt is an affront to the taxpayers of this county. File this challenge," he implored. "I have no doubt that this challenge will be turned down [by the Appraisal Review Board]; then you take it to the courthouse. The court is the place to get this done."

Wood, who a few weeks earlier had met privately with Todd and County Judge Sam Biscoe to discuss their options, appeared stung by the commissioners' willingness to retreat without a fight. And he hinted that the commissioners' own attorney, County Attor­ney David Escamilla, had told them they had nothing to lose by filing a petition. "This is not that hard – you're not going to fix it by doing nothing," Wood said, drawing applause from the audience. "And you're not going to to fix it by putting it off."

Commissioner Gerald Daugherty took issue with Wood's bluntness, which he viewed as disrespectful to county number crunchers who recommended against filing a challenge. "It's probably not a good place to start by coming and trying to insult us, the staff, and whatever," Daugherty said.

"When I see a situation where somebody is giving bad information, I am not inclined to sit here and just be nice," Wood responded.

County Commissioner candidate Brigid Shea, who has made property tax equity a centerpiece of her campaign, likewise urged the court to begin the first step in challenging the state's loophole-filled appraisal law. Like Wood, she favors seeking a remedy through the courts rather than a conservative, tax-averse Legislature, which she believes will fail to act unless directed by the court. "I think there's no harm in taking action today, but I think there is great harm in inaction," she told commissioners.

Shea later expressed disappointment in Tuesday's outcome. "I felt like the Com­mis­sioners Court had a real historic opportunity to begin to right the ship, and they backed away from it," she said. "By failing to act, it gives the Dan Patricks of the world a gold-engraved invitation to demagogue on this issue, and to push for provisions that won't fix the underlying unfairness at all, but will handcuff local governments so they can't provide services to their communities."