The nuts and bolts of the tax protest system for Texas property owners are not difficult to understand.

Nor is the reality that the Texas Legislature has allowed this system to degenerate to the point that genuine accountability in too many situations in too many counties for too many property owners is pathetically and disgracefully too inadequate.

While Texas Government Reality has and will continue to get into the weeds of the system when we challenge those in Texas who have the power to create reform, the ‘guts’ of property tax system can simply be explained and summarized.

A property owner who wants to protest the value that a central appraisal district has placed on their property has these options:

  • FIRST: Appeal to a three-member panel of what’s called the Appraisal Review Board (ARB) that will hear your evidence and make a recommendation to the full ARB for an actual decision.
  • SECOND: If not satisfied with the decision of the ARB, the property owner under certain circumstances pursue binding arbitration before an arbitrator.
  • THIRD: If not satisfied with the decision of the ARB, the property owner can file a lawsuit in a civil district courtroom of the county where the property is located and the ARB made the decision.

Those three bullet points represent in summary the system, the whole system, and nothing but the system. But, the underlying reality of those three bullet points is why TGR has asked property tax experts Pat O’Connor and John Osenbaugh to take us into the details. But in this column, we hope we address the bottom line effectively.

In our system of governance, there is a presumption under the law and under the Constitution of the State of Texas that each of these three basic options are fully ‘consumed’ by living and breathing fairness, equity, justice, and operational credibility.

Here’s the truth: the system is consumed by conflicts of interests heavily weighted to the advantage of governments that have a vested interest in higher property values and high property tax revenues extending from city hall to the halls of the Texas Legislature and every taxing jurisdiction in between.

Every position and every government that has authority over those three bullet points has inherent, internal conflicts of interest. The system is fatally compromised at the first bullet point – the Appraisal Review Board.

Please stay with me. It’s not complicated, but it takes a few words to walk through this.

  • The local governments in a county divvy up the seats on the board of directors for the central appraisal district (CAD) of that county. These local governments that impose the management structure on the system have vested interest in higher tax revenues.
  • The board of directors chosen by the local governments appoint the chief appraiser – the chief operating officer of the central appraisal district overseeing all functions of every department.
  • The board of directors of the CAD confirm the chief appraiser’s appointment of the Taxpayer Liaison Officer for the central appraisal district whose job assignment is subject the personnel evaluation of the chief appraiser.
  • The ARB members are nominally appointed by a district judge but the central appraisal district basically operates as the human resources department in the process. Moreover, having the judicial branch make administrative appointments on matters that can come before the judicial system is interesting to say the least.
  • The board of directors of the CAD appoints the Chairman of the Appraisal Review Board who has management obligations over the ARB that makes decisions about the validity of values assigned to property by the CAD that appoints the chairman of the ARB.
  • The board of directors of the CAD hires the law firm that represents the ARB and monitors the ARB’s legal compliance with the property tax code of Texas.

Add this literal twist to the reality described above. When a property owner protests, the matter is heard by a three-member panel (subset) of the full membership of the ARB. The only people who actually here evidence on the property owner’s protest are the three members of the panel who can only under the law RECOMMEND a decision to the full ARB.

Translated: When the ARB actually makes a decision on the evidentiary credibility of the central appraisal district’s evidence versus the evidence of the property owner, only three members of the ‘deciders’ have heard one stitch of actual evidence.

Is this not a system that encourages the practice where individual ARB panel members are ‘trained’ not to rock the boat and to validate the decisions of all panel recommendations so their recommendations will be confirmed?

Every aspect of this system screams out loud about the absence of even the pretense that there are genuine brick walls of independence between the governments that want your money and the property owners who are the target.

Few analogies are an absolute perfect fit for public policy issues. This one hits pretty close.

Now consider that you are defendant in a civil or criminal court proceeds. You have had criminal charges filed against you. Someone has filed a lawsuit against you. In the analogy below, feel free so substitute the District Attorney’s office or the Plaintiff’s law firm into the example as you choose. For the sake of ease, let’s call the DA’s office or the civil plaintiff’s law firm THE SYSTEM.

Now imagine that THE SYSTEM:

  • Got to choose the three-members of the jury panel to hear the evidence in your case. No, you don’t get a full jury to start the process, you get a jury panel. Their job is to make a recommendation to an eventual full jury that will not hear any actual evidence to make the actual decision.
  • Got to choose the top management officer who oversees all the jury panels in terms of operational credibility and fidelity to all the laws.
  • Got to choose an attorney to make sure that the jury panels were in strict compliance with all aspects of the law.

TGR is in this for the long haul. We hope you will stay with us because each of those bullet points have their own bullet points that need to be fully explored.