Property Tax Racket - Part II

It was good to see in the Saturday Houston Chronicle Editorial "Tax Protesters" a faint word of sympathy for Harris County homeowners besieged by those elected to serve us. Hopefully, it will be the first of many. That said, the Chronicle and most other media have been mostly silent on four key points: 1) nobody has challenged Harris County on whether they were entitled to the extraordinary tax revenues brought on by the real estate boom; 2) there's been little said about the out-of-control spending enabled by the taxing binge; 3) little has been reported on how the assessment strategy of HCAD created the artificially high housing prices that led to the current mess; and 4) nothing has been said about the biggest scandal of all: the blatant dishonesty of HCAD's taxing and appeals process.

- First, where does it necessarily follow that a housing boom and skyrocketing home values should allow Harris County - or any other tax assessing authority - to reap a windfall at the expense of their citizens? Aren't tax policies supposed to be driven by legitimate needs? Isn't the natural consequence of inflated tax revenues to unnecessarily grow the size of government?

- The tax windfall fueled the Spending that followed. In 2001, Harris County's population was 3.4 million. In 2009, it's just over 4 million, an increase of about 20%. In that same period, Harris County spending has grown from $790 million to $1.32 billion. That's an increase of 68%. What additional services is Harris County providing that would justify a spending rate more than triple our population growth rate?

- Which brings us to HCAD's role in inflating home values. They mention in the editorial that "under state law, valuations for residences cannot be increased by more than 10 percent annually". I would question whether a 10% yearly increase is justifiable under any circumstances, but look what HCAD did with that law, routinely imposing increases well in excess of the rate of inflation, and generally at or near the 10% maximum. Since appraisers and Banks use the Tax Authority's valuations as one of the key benchmarks in determining a house's market value - and homeowners enthusiastically borrowed against these inflated values - the rate increases were legitimized and the Housing Bubble was born, as well as the inevitable collapse. Was HCAD oblivious of the consequences of artificially inflating home values?

- Next, we need to talk about the 600 lb. gorilla in Harris County's living room: the processes for tax assessment and protest. HCAD's assessment policies are fundamentally dishonest for one simple reason: if you filed a protest in the past ten years, there was a 95% likelihood that HCAD would lower your rates. Doesn't that mean that they were intentionally overcharging homeowners in the first place? Since when is the worth of your home based on whether you make the effort to defend yourself from HCAD? Aren't markets supposed to do that?

- Finally, the Appeals process itself is punitive, forcing homeowners to take time off from work and spend many hours putting together elaborate documentation of comparative home values and other information in order to make their case. In other words, HCAD literally forces Homeowners to do the job that we are already paying them to do. As to the process itself, the homeowner is guilty until proven innocent, the Appraisers mostly stonewall and try to wear you down, and the Appeals Board tries to intimidate you and rush you out the door. Have any of them - most notably HCAD chief Jim Robinson - experienced even a twinge of doubt about these practices? Have any of them entertained - even for a moment - the notion that they might be overcharging homeowners?

This is the very opposite of Public Service. HCAD - and Harris County - have a lot to answer for, as do politicians at the local, state and federal levels. The time is long past for this type of behavior to be criminalized. Would that it shall be.