May 17, 2021
The following report was prepared by LSEJ Legislative Counsel Debbie Cartwright
May 3, 2021
A bill that is the handiwork of LSEJ is SB 1436 (Bettencourt) and its companion HB 2959 (Shine). The legislation addresses the need for school districts and eligible property owners to have a fair opportunity to present their cases in district court appeals of the Property Value Study (PVS). Currently, property owners have no right to appeal a determination by the State Office of Administrative Hearings (SOAH), and school districts may appeal but cannot produce appraisal information that was not heard by SOAH judges. The proposed new law would create a trial de novo standard of review, just as appraisal district litigation has, and allow property owners to join with school districts in their appeals. SB 1436 is scheduled to be heard by the Texas Senate on May 3 and hopefully will be referred to and approved by the House Committee on Public Education soon. It is possible that this important legislation will become law.
The first property tax bill to pass both the Texas House of Representatives and the Texas Senate is SB 1438 (Bettencourt). The bill deals with the definition of disaster for purposes of a partial exemption based on the level of property damage incurred. Amendments were added on the House floor that probably will result in a conference committee to consider the differences. The amendment that removed the local option feature of the law that exists when tax rates have already been approved before the disaster occurs will be the primary consideration.
Two other Senate bills are progressing. SB 334 (Johnson) authorizes appraisal districts to release confidential sales information to owners for arbitration proceedings, just as they do for ARB hearings. It also removes the population bracket in current law so that all appraisal districts may release the information. The bill passed the Senate and was referred to the House Committee on Ways & Means last week. SB 916 (Seliger) requires that the Texas Department of Licensing and Regulation (TDLR) adopt a rule to create electronic links to Comptroller Methods & Assistance Program (MAP) reviews and Property Value Study (PVS) findings for school districts to chief appraiser registrants. The bill passed the Senate and was approved, as substituted, by the House Committee on Ways & Means last week.
HB 2723 (Meyer) passed the House and was referred to the Senate Committee on Local Government. The bill amends several truth-in-taxation provisions, primarily by changing the online address and server for notices of tax rates and estimated taxes. The single website will be administered by the Texas Department of Information Resources (DIR).
HB 2429 (Meyer) also passed the House. It clarifies provisions regarding the calculation of the de minimis tax rate for purposes of truth-in-taxation. HB 115 (Rodriguez) passed the House and was referred to the Senate Committee on Finance. The bill expands the law regarding exemptions for housing offered by non-profit organizations for homeless persons.
Several bills will require attention by LSEJ and the Texas Association of Appraisal Districts as the Legislature moves to the end of the regular session on May 31. SB 63 (Nelson) is a comprehensive bill that places strict deadlines for the scheduling of appraisal review board (ARB) hearings and determinations of applications for exemptions and special appraisals. It also places term limits on appraisal district boards of directors, requires email or text message reminders of ARB hearings, and mandates that specific reasons for denials of applications be listed in notices. SB 63 passed the Senate and is pending in the House Committee on Ways & Means. A substitute bill is likely to be considered next week.
SB 449 (Hancock) is the companion to HB 988. The bills deal with lawsuits or binding arbitration for alleged procedural violations by ARBs. SB 449 was left pending in the Senate Committee on Local Government after a hearing. HB 988 passed the House last week with significant floor amendments. The language in a substitute to HB 2014 was added to the bill. The amendment includes the following: (1) additional time for goods-in-transit to leave a location (270 days) in cases of disaster; (2) permission for property owners to request change of use determinations concerning open-space land designations and a 90 day deadline; (3) requirement that accounts be separated or consolidated at a property owner’s request under certain circumstances; (4) authorization for corrected notices of appraised value regarding business personal property; (5) creation of a single-member appraisal review board panel if requested by a property owner; (6) changes to the content of orders determining protest and delivery by email; and (7) amendments regarding judicial appeals and discovery. Also added on the House floor was an amendment that would make informal meetings before appraisal review board protest hearings mandatory. The amendment is onerous because of the timeline included and other requirements. Efforts are being made to revise this provision. The differences in the two versions will be considered in the Senate Committee on Local Government.
SB 1413 (Paxton) requires electronic communications for appraisal districts, taxing units, appraisal review boards, and the Comptroller concerning renditions, notices, applications, and tax payments. These governmental entities are required to communicate electronically, as provided by Comptroller rule, if requested by a property owner or agent. The bill passed the Senate and was referred to the House Committee on Ways & Means.
The pace of the Legislature is brisk at this point in the regular session. LSEJ will attempt to keep its clients informed of the status of bills. The reports will not include every bill that is moving through the process. Hopefully, the list will become more definitive in the next two weeks.
March 30, 2021
A number of bills dealing with property taxation have been heard by the House Committee on Ways & Means. Three bills have been voted out and sent to the Calendars Committee. They are: (1) HB 115 (Rodriguez, Eddie) allowing non-profit organizations that provide services to homeless individuals to expand their service areas; (2) HB 457 (Shaheen) creating a local option partial exemption for counties regarding the residence homesteads of physicians who provide medical services to persons receiving Medicaid and who do not receive compensation for those services; and (3) HJR 25 (Shaheen), which is the constitutional authorization for HB 457.
Other bills relating to property taxation have also been approved by the Committee on Ways & Means. They are: (1) HB 533 (Shine) expanding on-line sales of personal property seized after a tax warrant to all counties (not just Harris); (2) HB 1197 (Metcalf) changing the number of years from 6 to 10 that a religious organization may maintain an exemption on land acquired to construct a place of worship; (3) HB 2404 (Meyer) requiring a statewide data base of local economic development agreements; and (4) HB 2429 (Meyer) clarifying provisions of HB 2 from last session dealing with de minimis tax rate notices.
Three other bills are likely to be approved by the Committee on Ways & Means soon. HB 988 (Shine) received a great deal of scrutiny after concerns were raised by the Texas Association of Appraisal Districts, Texas Rural Chief Appraisers, and LSEJ. The result is a substitute bill that permits a property owner or designated agent to request limited binding arbitration concerning alleged procedural violations by an appraisal review board (ARB). Filing, arbitrator appointment, and final determination deadlines are outlined in the bill. Taxpayer liaison officers are required in all counties and may serve more than one county in locations with populations of 120,000 or less. The limited arbitrations do not prevent an ARB from issuing an order determining protest; however, a new hearing, if required by an arbitrator, could reverse the prior order. The Comptroller’s model hearing procedures are required to be adopted by ARBs. In addition, the chairman of an ARB may be removed by the appraisal district board of directors for failure to comply with those procedures.
HB 2014 (Lucio III) includes a number of provisions involving different areas of the Tax Code. A substitute bill is currently being drafted by Legislative Council. It permits appraisal districts to send corrected notices of appraised value for any reason prior to June 1 concerning values of business personal property. After June 1, corrected notices are permitted only to add omitted property or correct a clerical error. Single-member panels are authorized for ARB hearings if the property owner or designated agent agrees. Account splits or mergers are required if requested by a property owner or designated agent; requests for splitting an account must be accompanied by a deed identifying the property separately and proof that no taxes are due. Orders determining protest must include values for land and improvements separately; however, these values may not be the subject of separate appeals. Other amendments to judicial review are included. Electronic delivery of orders determining protest is required if a request is made by a property owner or a designated agent before the appraisal review board hearing.
HB 2723 (Meyer) makes a number of changes to truth-in-taxation provisions enacted during the 2019 legislative session. The Texas Association of Appraisal Districts worked closely
with Chairman Morgan Meyer to craft a substitute bill that was heard by the Committee on Ways & Means on March 29. It changes the online address and server for notices of tax rates and estimated taxes. This single website, administered by the Texas Department of Information Resources, will be available for all property owners who will be notified by their notices of appraised value. The current requirement for mailing a postcard on August 7 to notify property owners of the website will be eliminated, except for property owners who do not receive notices of appraised value in a year. The cost of the mailing will be greatly reduced. The new website will be less confusing and will create one source of information that is consistent for all counties.
Other bills that were heard by the Committee on Ways & Means on March 29 dealt with Chapter 313 economic development agreements by school districts. HB 1502 (Deshotel) and HB 1556 (Murphy) both extend the program for another ten years. HB 1556, however, makes a number of changes to the administration of the program and how it impacts school finance. After a number of hours of testimony, both bills were left pending.
SB 916 (Seliger) was heard by the Senate Committee on Local Government on March 29. The bill originally required notations in the records of the Texas Department of Licensing and Regulation (TDLR) for noncompliance by a chief appraiser regarding Comptroller reviews (MAP). Because of the difficulty in assigning noncompliance responsibility to individual chief appraisers, a substitute bill was presented. The substitute was recommended by the Texas Association of Appraisal Districts and LSEJ. It requires electronic links to MAP reports finalized during each chief appraiser’s tenure with his or her registration in TDLR records. In addition, it allows appraisal district boards of directors to receive information from TDLR about its compliance efforts regarding other appraisal districts’ MAP reviews.
March 9, 2021
The 87th regular session of the Texas Legislature started on January 12 without much fanfare due to the pandemic. Opening ceremonies were subdued as a result of social distancing, masking, and efforts to protect legislators, legislative staff, and the public from exposure to the deadly COVID-19 virus. Many bills had already been filed by the time these ceremonies occurred, and as of the end of March 5, over 3,000 bills and constitutional amendments have been filed. By the filing deadline on March 12, it is anticipated that over 4,000 bills will await legislative consideration before the session’s end on May 31.
Legislative leadership—Governor Greg Abbot, Lieutenant Governor Dan Patrick, and Speaker of the House of Representatives Dade Phelan (R—Jefferson)—promised to coordinate efforts and work together to make the session a successful one. Committees were appointed by the end of January. Heading the Senate Local Government Committee, where property tax bills are anticipated to be referred, is Sen. Paul Bettencourt (R—Harris) who has years of experience with the subject. Heading the House Ways & Means Committee is a newcomer to the subject, Rep. Morgan Meyer (R—Dallas). By March 8, both committees will be organized and ready to have hearings. In fact, the Ways & Means Committee will hear five bills on that date.
Priorities during this session will deal with issues that do not include property taxation. Chief among those priorities is the issue of energy reliability and supply. The snow and ice storm that left so many Texans without power and water left a lasting impression that has raised public awareness about the shortcomings of our electric grid. Legislative investigation has begun, and it is certain that some change will occur to the current system of generation and distribution of electrical power. Another priority will concern the impact of the pandemic on the Texas economy, our healthcare system, and related matters. Efforts will be made to ensure that the public is vaccinated, the economy is jump-started, schools are reopened, and individual rights are protected.
The Legislature is also working on balancing the budget, which is especially difficult with decreases in sales tax and oil/gas revenue. It is considering the redistricting of congressional and legislative districts, as required by law every ten years. Other important issues are election integrity and social justice concerns.
Property tax bills that are being tracked by LSEJ number around 200. Of particular interest are bills that would require chief appraisers, appraisal district directors, and appraisal review board members to be elected. These bills would politicize the process and are opposed. Several bills (including SB 449, HB 988, and HB 1120) would create a process for lawsuits to be filed to challenge procedural violations by appraisal review boards and chief appraisers. This proposal would lead to unwarranted litigation and delays in appraisal roll certification. This and other bills that will negatively impact appraisal district administration will be opposed by LSEJ.
Kirk Swinney and Debbie Cartwright presented a legislative update to the Tri-Region Chapter of TAAD on March 4. An outline of that presentation is provided here. LSEJ will provide legislative updates for the rest of the session to keep you informed and prepared to address bills as they are considered.
Fourteen days remain in the regular session of the 87th Texas Legislature. The last two weeks are always the most hectic with important deadlines. May 21 is the last local and consent calendar in the House of Representatives for House bills on second and third readings. May 22 is the last day that a House committee may report Senate bills. May 25 is the last day for the House to consider on second reading Senate bills on daily or supplemental calendars. May 30 is the last day for the House to adopt conference committee reports or concur in Senate amendments to House bills. The last day of the session is Monday, May 31. Yes, it will be a busy Memorial Day weekend!
SB 1436 (Bettencourt) was reported favorably by the House Committee on Public Education last week. The legislation was crafted by LSEJ and will bring fairness to the Property Value Study (PVS) district court appeals process if enacted. The bill creates a trial de novo standard of review, just as appraisal district lawsuits and State tax litigation have. The bill authorizes property owners to join school districts in their appeals. SB 1436 is important to school and appraisal districts, as well as eligible property owners, to ensure the accuracy of the PVS. Hopefully, time will not run out on this bill.
Several bills mentioned in previous updates have been substituted with compromise versions. SB 63 (Nelson) is a comprehensive bill that places strict deadlines for the scheduling of appraisal review board (ARB) hearings and determinations of applications for exemptions and special appraisals. It also places ten-year term limits on appraisal district boards of directors, requires email or text message reminders of ARB hearings, and mandates that specific reasons for denials of applications be listed in notices. A substitute bill was approved by the House Committee on Ways & Means last week and is headed to the Calendars Committee.
HB 988 (Shine and Hancock) is on the agenda for the Senate Committee on Local Government on Monday, May 17. The bill deals with lawsuits or binding arbitration for alleged procedural violations by ARBs. In addition, the provisions of HB 2014 were added to the bill in the House. A substitute bill will be presented at the committee hearing and will be thoroughly reviewed by LSEJ when it is made available.
SB 1413 (Paxton) requires electronic communications for appraisal districts, taxing units, appraisal review boards, and the Comptroller concerning renditions, notices, applications, and tax payments. These governmental entities are required to communicate electronically, as provided by Comptroller rule, if requested by a property owner or agent. A substitute bill passed the Senate and was referred to the House Committee on Ways & Means. A hearing was held last week, and the bill remains pending. Considerable opposition has been voiced by tax assessor-collectors. A compromise may be forthcoming.
Other property tax bills that are important to appraisal districts and appraisal review boards are moving through the process. A complete report will be given to LSEJ clients at the end of the session.