‘The implications are not good.’ Tarrant Appraisal changes could lead to higher school taxes
Several Tarrant County school districts are worried about how recently approved changes to the property appraisal process will affect their ability to receive state funding and service their bonds. For homeowners in their districts, the result could be higher taxes.
The Star-Telegram reached out to every school district in the county to ask about their reactions to changes approved by the Tarrant Appraisal District Board of Directors on July 22.
The changes include switching to recalculating appraisals every other year, instead of annually, and a freeze on appraisals for 2025. The board also approved a 5% “threshold” to market value increases, meaning that TAD must provide “clear and convincing evidence” to support an increase higher than 5%.
The majority of the districts that responded were among the county’s smallest, like Kennedale, whose superintendent Chad Gee said, “the implications are not good.”
Kennedale has just under 3,000 students.
“We along with all other public schools in Tarrant County are concerned and worried how this may impact us,” Gee said in an emailed statement.
Districts are still analyzing exactly how the appraisal process changes will affect them, but said it is clear that they could have detrimental effects on how they set their tax rate for bond payments. Changing the frequency of appraisals and artificially keeping home values low could result in higher taxes.
School districts base their tax rates on these valuations, and if the certified taxable value is too low to meet their bond obligations, they’ll have no other choice but to raise rates, Gee said.
Representatives from Northwest, Grapevine-Colleyville, White Settlement and Mansfield expressed similar concerns.
With over 35,000 students, Mansfield was the largest district to respond to the Star-Telegram’s questions.
“MISD voters approved a $588.5 million bond package in May 2024,” a district representative said in an emailed statement. “The tax impact MISD presented to voters was based on the prior reappraisal schedule and projected property value growth, as was the district’s total budget and projected tax rate for the 2024-25 fiscal year. Our projections may no longer be accurate under these untimely and unexpected revisions adopted by TAD.”
The Mansfield school district representative also referred to a lack of financial support from the state in the face of other revenue losses, which they said could lead to Tarrant County school districts receiving less funding than districts in other counties.
Schools across the state are having to face tough realities about how to fund their operations, even in the face of a $33 billion surplus in the 2023 state budget.
A representative from Northwest said the district is “deeply concerned about the drastic impact” of the changes.
“School districts face the potential loss of millions of dollars annually because of these changes,” the representative said.
The Northwest school district, which straddles the Tarrant, Denton and Wise county lines, has more than 31,000 students.
Grapevine-Colleyville ISD said the impact won’t be known until the 2025 tax year. It serves serves just over 13,500 students.
“These changes from the Tarrant Appraisal District Board are going to limit that property value growth, basically freezing values for 2025, except for new home and commercial construction,” said Grapevine-Colleyville ISD Chief Financial Officer Derick Sibley.
A White Settlement representative said the changes could cause variance between TAD appraisals and the Texas Comptroller’s property value study, which can lead to a loss of funding for school districts.
“We would encourage the TAD Board of Directors to work in collaboration with the Texas Education Agency to ensure that TAD understands how any changes will impact the state’s funding mechanism in regards to school districts as well as revenue for city and county services,” the representative said.
Just under 7,000 students attend White Settlement schools.
Representatives from the Azle, Birdville, Crowley and White Settlement school districts shared similar concerns at the board’s meeting.
Chief Appraiser Joe Don Bobbitt said that TAD is aware of the potential risks to school district funding and is talking with school districts to determine the possibility of other risks that may arise from the changes.
TAD Board of Directors Chairman Vince Puente said in an emailed statement that “most board members are concerned that we provide the best services for the Entities,” such as school districts. Other taxing entities include cities, the county and special districts.
“We are all concerned with helping to make Texas the best place to own a home, and if possible, relieve some burden, whether it be to slow down residential tax increase or providing less reasons to protest their taxes each year,” he said. “As we all know, with any change there is resistance and the unknown.”
Tarrant County Tax Assessor-Collector Wendy Burgess, who sits on the TAD Board of Directors, said she will “faithfully work with each of our entities to prepare for the impact this decision will have in the future.”
“Although I did not agree with the timing and decision to change the reappraisal schedule, I made every effort to personally contact our Tarrant County entities and make them aware of the opportunity to appear and speak before the TAD board during the public comments agenda item,” she said.
While the changes do not guarantee negative effects to schools, they do open up that possibility, according to Josh Haney, vice president of finance for the Austin-based school finance consultancy Moak Casey.
“Moving to a two-year appraisal process could increase the risks of districts losing state aid or paying more local property taxes back to the state in the form of recapture,” Haney said.
Also known as Robin Hood, recapture is the equity mechanism in the school finance system that redirects surplus property taxes from wealthier school districts to lower income ones.
The Texas Comptroller’s biennial point value study determines the total taxable property value in a district. If a district fails this study by the appraisal district’s numbers differing from the comptroller’s by more than 5%, the state will repeat the study the following year.
School districts are penalized if they fail two years in a row, and if the appraisal district does not reappraise after a failing year, the district will likely repeat the failure.
“There remains the question of what the appraisal district would do in that situation,” Haney said. “Would it reappraise again?”
Fort Worth-based property tax consultant Chandler Crouch said he thinks that reappraising every other year is sufficient, since it lines up with the comptroller’s biennial study.
“By doing it every two years, you’re safe on that issue,” he said.
This story was originally published July 29, 2024 at 2:04 PM.
