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Handbook for Texas Public School Districts
Property Tax Collection and Administration
10 Ways to Help
Chapter 1 Establish Tax Collection Policies
Chapter 2 Effectively manage the collection and deposit of taxes
Chapter 3 Outsource or Not
Chapter 4 Work closely with delinquent tax attorneys
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Chapter 5 Understand the Property Value Study
Chapter 6 Understand appraisal standards
Chapter 7 Adopt the correct tax rate
Chapter 8 Know the law and how changes impact schools
Chapter 9 Understand the role of the appraisal review board
Chapter 10 Work collaboratively with school, city, county and other taxing jurisdictions

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Comptroller Carole Keeton Strayhorn knows that all facets of local government in Texas—especially our schools—face enormous budget challenges, which makes the effective collection and efficient administration of local property taxes more important than ever before. While state law allows the Comptroller’s office to advise local governments and taxpayers on property tax issues, it prohibits the agency from intervening in local tax matters. This handbook provides school administrators and board members help in understanding how appraisal districts and school districts can work together to better serve taxpayers, ensure that taxes are collected equitably and in accordance with state laws and efficiently administer property tax appraisal and collection.

Property Tax in Texas

Property taxes—also called ad valorem taxes—are locally assessed taxes that provide more tax dollars for local services in Texas than any other funding source. Property taxes help to pay for public schools, city streets, county roads, police, fire protection, parks, libraries and many other services.

Local appraisal districts value property, school boards set tax rates and tax assessor/collectors collect the taxes. State law governs how the process works.

The Texas Constitution sets out five rules for the property tax:

  • Taxation must be equal and uniform. All property must be taxed equally and uniformly and valued according to constitutional mandates. For example, all residential homes need to be valued using uniform techniques, as do commercial properties and utility properties. No single property or type of properties should pay more than its fair share of taxes.

  • With some exceptions, all tangible property must be taxed on its current market value. The exceptions include agricultural land and timberland. A property’s market value is the price for which it would sell when both buyer and seller want the best price and neither one is under pressure to buy or sell. Land used for farming and ranching can be valued on its capacity to produce crops or livestock, instead of its value on the real estate market. Special timberland appraisal is also available to property owners whose land produces timber for products.

  • All property is taxable unless a federal or state law provides an exemption for it and there is constitutional authorization. Exemptions may exclude all or part of property value from taxation.

  • Property owners have a right to reasonable notice of increases in appraised property value.

  • Each property in a county must have a single appraised value.

There are five main participants within the property tax system in Texas:

  • The property taxpayer, whether residential or business, is responsible for paying assessed taxes and has a reasonable expectation that the taxing process will be fairly administered.

  • An appraisal district in each county, administered by a chief appraiser, sets the value of taxable property each year. The appraisal district’s board of directors hires the chief appraiser. Local taxing units appoint the directors and fund the appraisal district according to a formula that is based on taxes.

  • An appraisal review board (ARB) settles disagreements between taxpayers and the appraisal district about the taxability and value of property. The appraisal district’s board of directors appoints citizens from the community to serve as ARB members.

  • Local taxing units, which include school districts, counties, cities and special districts, decide how much money they must spend to provide public services annually. School districts rely on the local property tax, in addition to state and federal funds, and typically set their tax rates at levels that will pay for the difference between budgeted expenditures and state and federal funds.

  • The Comptroller’s Property Tax Division conducts an annual Property Value Study (PVS) that assigns a value to property within each school district for state funding purposes. This study, an independent estimate mandated by the Legislature, is designed to ensure equitable school funding. The study ensures equity by detecting instances where school property values are inaccurate and adjusting property values to market value in the state’s funding formula. The state sends more money to those districts that are less able to raise money locally because of insufficient taxable property value. The Comptroller’s values do not directly affect local values or property taxes, which are determined locally. However, when local values are more than 5 percent below state values, the school district could receive fewer state dollars because the funding formulas will use state values to calculate state funding. Through a Comptroller appeals process, a school district can contest the state values. In any case, understanding the reasons for the differences in the state and local values is critical for school districts and the appraisal districts that serve them.

School districts play a vital role throughout the process of appraising the taxable property, protesting the values, adopting the tax rates and collecting the taxes. All too often, however, school districts relinquish some control over the process because it is complex—and the laws, rules and regulations leave board members and administrators frustrated and feeling powerless.

After working with hundreds of school and county appraisal districts, the Comptroller has developed 10 basic guidelines school districts need to know and use to effectively face the challenges before them in assessing and collecting property taxes in Texas. These common sense guidelines help Texas school districts ensure taxes are collected equitably, and in accordance with state laws, and to efficiently administer property tax appraisal and collection.