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The Hard Work of Tax Reform in Galveston In October County Judge Theodore Robinson and the four commissioners–Irwin Dantin, Jimmie Vacek, R. W. Palmer, and Jack Lawrenceofficially refused to hire what their resolution called “some outsider who is not responsible to the taxpayers of the county at an additional cost of over $100,000.00.” Hiring “some outsider,” said the county fathers again, “would probably result in an invasion of the privacy of all of the home owners of this county, and would create an unnecessary tax burden upon all of the small taxpayers of the county.” Banker Hall set about seeing if he could not feed the county officials their words for their political Thanksgiving. On Nov. 4, 1953, that is, a month after the court refused to call in outside appraisers, Hall’s lawyers filed, for his Citizens State Bank, a lawsuit against all five members of the county court and Oberndorfer, alleging the bank’s assessed valuation was too high, in violation of the Texas Constitution and state laws “which require equality and uniformity of taxation.” The petition said Oberndorfer had admitted in court that some assessments were too high, some too low, and he did not have employees competent to equalize them. It recited figures and conclusion from the Byess audit. On Jan. 22, 1954, the county gave in, accepting Citizens State Bank’s offer of $948 taxes instead of the $1,246 the county was insisting upon. An attorney for the court said the lower tax was accepted because the amount involved was so small. Hall would not let that pass; in a statement he said the court had confessed “that it has been and is violating the law” about fair and equal taxation and knew “that we would prove … that many large businesses in the city of Galveston and on the mainland are being taxed at only a small fraction of the rates at which homes are being taxed.” He went as far as to say that the court’s refusal to equalize taxes “is adequate grounds for action to have the members removed from office, and our next step will come after consultation with our attorneys.” In 1959, with the tax rolls reformed, Hall says the county court was “willing” to hire the outside appraisers. He did not sound like he thought so in 1954. 5 More Crafts Join S.A. Strike SAN ANTONIO The San Antonio craftsmen’s strike spread to five more locals this weekironworkers, carpenters, operating engineers, plasterers and cement masons, and laborersas Jack Martin, president of the San Antonio building and construction trades, Charged that Associated General Contractors and the Mechanical Contractors’ Assn. refused to negotiate and wanted a strike to cut labor costs for a while. Company spokesmen said they did not want a strike and the wage demands were inflationary and would raise construction costs. All five unions want 12.5 cents an hour now with another 12.5 cents in a year. The San Antonio construction industry has been at a virtual standstill since plumbers and pipefitters and sheet metal workers struck in August \(Obs. Sept. THE TEXAS OBSERVER Page 2 October 2, 1959 In September that year, determined to place the court in an untenable position, Hall rendered Citizens State Bank’s value at $24,000, about one fourth of the county’s $82,500 assessment. And he was preparing another lawsuit. Had the county accepted the $24,000 valuation, other banks, and then other businesses, could have followed suit, making of the county’s tax system a shambles and a farce. On the other hand, evidently the court did not wish to contest a law suit based on charges that taxes were not fair and uniform. The county fathers decided to go along with the unmollifiable Mr. Hall if he would agree that his bank pay taxes on the usual basis. He agreed. On Sept. 17, in a somewhat petulantly worded minute, the court repeated its censure of the assessor-collector for not keeping his records up to date, said the services of “expert revaluation engineers” \(no longer called, by “extremely ex,pensive,” said it “hesitates to spend such sum of money” without first making an investigation, and therefore resolved to hire an independent tax consultant to make “a preliminary investigation,” to determine if “the tax inequities” Hall had brought forward were “only isolated cases” or were “numerous,” and to determine whether the assessor-collector could fix up the situation or whether “it will be necessary to hire independent revaluation engineers.” If the consultant decided this last step was necessary, said the court, then the court considered it “their duty to mploy such experts.” ‘Real, General, … Thus it came to pass that less than two years after the eyeopening Byes audit, P. L. Marquess, a C.P.A. hired by Galveston County, reported his more conclusive, and much more shocking, findings about tax inequities in the county. In his cover letter Feb. 21, 1955, the Wharton, Texas, accountant told the county court, “There was no consistent ratio between the sales consideration and the assessed value,” which ranged from less than one percent to more than 200 percent. He had been told, he said, that new properties were being assessed at somewhere between 27.5 percent and 55 percent of the fair market value. He found, on the other hand, that one fifth of the properties were being assessed at less than 10 percent of their cash value, one fourth of them at from 10 to 20 percent, a third at 20 to 30 percent, and a fifth at more than 30 percent. “The urban properties were assessed at an average of 21.69 percent, and the rural properties at an average of 5.59 percent,” Marquess declared. Assessment ratios for “several large business firms” Taylor County Results Involved Many Factors GALVESTON Judge E. S. Pritchard \(not James, as said erroneously last partner F. L. Abbott, the 225person valuation engineers firm of Pritchard & Abbott, Fort Worth, says he did not intend to convey in last week’s remarks the impression that all the county officials in Taylor County were re-elected because of the revaluation program in that county. They were all re-elected, but of course there were other factors as well as the tax equalization, he said. ranged from 7 to 32 percent. For “several railroad companies and one gas company” the ratios ranged from 8 to 44 percent. Refineries’ assessments were evaluated in terms of their through-put capacity, and Marquess found that the Jefferson County figure was $125 assessed value per barrel; Harris County, $108; Brazoria County, $106; and Galveston County, $60. This was based on 1952 assessed values for state and county property tax purposes. Pan American, Republic, Sid Richardson, and Texas City Refining Co. refineries were being assessed at from 12 to 15 percent in Galveston County, he said. For the banking institutions, “the assessment ratio differed from 47.56 percent to 0.50 percent,” he said. The minerals assessments of the county amounted to $15 million and the same in the school districts, $34 million. The tax rolls of Galveston County in 1954 showed a valuation of $153 million, while the summary of the school tax rolls showed $287 million. Marquess found little Change in the assessed values of pieces of propertysome of them in downtown Galveston and Texas Cityover a stretch of 40 years. Ten acres carried at $200 in 1911 had dropped to $165 by 1954. A lot in Galveston carried at $1,800 in 1922 had dropped to $800 by 1954. A $350 lot in Texas City in 1912 was still carried at $350 in 1954. Two Galveston lots carried for $600 in 1915 had increased in recorded value, 39 years later, by $100. Marquess was harsh with the tax office, inferentially. He listed the office’s employees as the assessor-collector, 23 clerks, and one appraiser. And he said: “The transfers in ownership of properties are made from lists compiled by the Merchants Assn. There are no modern abstracts of title, plat, or block records. There are no full records of descriptive inventories of buildings and improvements, front foot values of lots and lands, acreage values, or personal properties.” Marquess concluded that the tax inequities in the county were “real, general, and numerous.” He recommended the hiring of independent valuation engineers. In his tables, Marquess pointed out that on the basis of his study, assessments were widely variant among kinds of property, to wit: City or subdivision, a 22 percent assessment ratio; rural property, 6 percent; industries, 18 percent; AUSTIN Atty. Gen. Will Wilson’s office has researched, written, and is reproducing for about 550 Texas vveeklies, a series of twelve articles on disputes over different Texas borderlines. Wilson himself is bearing the cost of the project. Nancy Jones, his publications director in the Attorney General’s office, said, “The state is involved in no way he paid for everything out of his own funds, he bought the stamps, the stationery, and everything.” Wilson said, further, he is paying, out of his personal funds, for line drawings for the series by El Paso artist Jose Cisneros. “It’s a research job,” Mrs. Jones said, and will not be bylined by anyone in Wilson’S office. Wilson said, “It seemed to me a thing people would be generally interested in.” He said the articles will go into Louisiana neutral ground, the fights over minerals, 16 percent; banks, 41 percent. Although he did not have new, technically satisfactory revaluations of the industries to go on \(which Pritchard & Abbott were soon to set about seeking to supassessments against “full value” of a number of major industries. This is what he found comparatively: Union Carbide, 23 percent; Pan American Refineries, 15 percent; Monsanto Chemical, 16 percent; Bayside Warehouse, 14; Cotton Concentration Co., 12; Union Passenger Depot Co., 30; Hi Grade Packing Co., 19; Moody Compressors, 25; Republic Oil & Refining Co., 12; Sid Richardson Refining Co., 15; Texas City Refining Co., 15;Reconstruction Finance Corp., 16;GH&H Railroad Co., 20; Galveston Terminal Railroad Co., 17; Texas City Terminal Railroad Co., 8; Southern Union Gas, 44. Obviously this was potent stuff, because it gave some industries and banks a pecuniary motivation for tax equalization. Big Industries Oppose With the revaluation contract’s signing in the offing, John B. Richardson, tax authority for several major industries on the mainland, appeared before the Galveston County Democracy Club in March, 1955, and opposed hiring outside valuation engineers. “Heavy industry is carrying more than its share of Galveston County property taxes,” he said, “while the individual taxpayer is . in Utopia as far as property taxes are concerned.” He said there was no evaluation on livestock, private motor boats and planes, merchandise, house furniture, store and restaurant fixtures, and office furniture. He favored revaluation, but by the tax assessor’s office. When he was asked during the meeting of the liberal Democrats of the county if an independent staff should be hired, he replied, “It wouldn’t do any good,” according to a brief account in the Galveston News. Ralph Crawford, attorney for Hall’s bank, told the Observer of his sale \(on s behalf of an estate he acre tract of land between Offatt’s Bayou and a freeway. The sale price was $25,000 cash; the land was listed on the tax rolls for $250, he said. Signing the revaluation contract with Pritchard & Abbott for a low bid of $303,500 in April, 1955, the Red River border with Oklahoma, controversies over Rio Grande border, and other such subjects. The title of the series will be “Battle Border.” Cisneros, the artist, who is also a streetcar motorman in El Paso, is “virtually giving his services away,” Wilson said, compared with what Cisneros usually draws down for his work. In her announcement of the series, Mrs. Jones, on Wilson’s Official stationery, told the weekly editors: “In the course of his tidelands research Atty. Gen. Will Wilson uncovered a vast amount of little know colorful facts about Texas boundary disputes dating back to 1716. “In the interest of public education the information has been compiled into a series of 12 articles entitled ‘Battle Border’ which ‘has been specifically prepared for weekly Texas newspapers.” the court said the cost was heavy, but the county would be receiving not only the revaluation, but maps, abstract books, and other necessary records which would cost about $100,000 otherwise. Furthermore, such revaluations usually paid for themselves the first one, two, or three years after they were completed, said the court. The project was supposed to have been finished in two or three years. Actually it took four years and then another six or eight months in negotiations with taxpayers. The Observer understands that one year was let pass without recording the new values for political reasons, after which the valuations had to be updated. The ultimate cost of the program to the county, Judge Theodore Robinson told the Observer, was about $460,000. Pressures against the program exploded through the Texas City Chamber of Commerce in May. 1955, when it alleged that the county commissioners “discriminated against the mainland in that only properties on the mainland are appraised and evaluated in the first stage,” and that valuation of Galveston properties was “optional” under the contract. The court admitted the contract with Pritchard & Abbott contained “unusual wording” and amended it to provide specifically that no new taxes would go on the rolls until the whole program was completed. Objections overcome, contract in hand, Pritchard & Abbott went to work on what was to become probably the largest successful county-wide revaluation program in Texas history. R.D. * Dallas Changes Rate On 1941 Tax Level DALLAS Dallas City Council has announced a plan to use 100 percent instead of the present 65 percent of the 1941 level of property values as the basis next year for its city property taxation. The plan is designed to decrease the tax rate from $2.40 to about $1.56 in order to improve the city’s bond rating on the municipal bond market, which would reduce interest rates on city bonds, which would reduce tax needs. River Radioactivity Not Alarming So Far AUSTIN