A lawsuit brought against the state of Texas by the city of Austin on Monday attempts to show what many have claimed for decades: When it comes to property tax appraisals, the owners of large commercial and industrial sites have an unfair advantage over homeowners.
So much so, the suit claims, that the state’s property tax appraisal system no longer meets the constitutional requirement that tax burdens be “equal and uniform” in proportion to real property values.
It’s an ambitious attempt — some say on the scale of the latest round of lawsuits challenging the way Texas funds its public schools. The school case is scheduled for oral arguments before the Texas Supreme Court on Tuesday.
The property tax suit is ambitious not just because it faces powerful opposition from the state and business groups, but also because the Legislature has heard its arguments in many ways through the years and has declined to act.
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Still, the suit could end up being a major step toward a better system.
Big commercial and industrial property owners have more money at stake and thus have more incentive to hire the best attorneys who specialize in getting tax appraisals reduced.
That in itself is not unfair. The question focuses more on whether the resulting appraisals are so far wrong as to throw the system off kilter.
One of the targets of the lawsuit is a process known as “equity appeals.”
The Austin American-Statesman reported on that process in depth in 2013. It relies on a procedure established through a mostly unnoticed amendment to a tax bill approved by the Legislature in the last days of its 1997 session.
After the change, owners no longer had to argue that their property was appraised higher than its fair market value. They only had to argue that it was higher than the median appraised value of similar properties.
That made it much easier to get values lowered to the median.
Some experts say the result is that tax rolls end up billions of dollars short of where they should be, and homeowners pick up the slack.
Austin’s lawsuit seeks to prove all of that. It won’t be easy and, if the school finance case is any yardstick, it won’t be quick.