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The Texas pattern of unequal tax appraisal: As values go up taxes go down 100 90 .-. …..14 i 80 ?-. 70 o 60 c 50 0 7. co 40 co 30 > 20 Typical VR 10 Range of 2/3 of VRs 0 Very Low Medium High Very Low High Relative value of property This chart developed by Craig Foster illustrates value-related inequalities across all categories of property generally inventoried and taxed by Texas assessors. Therefore, it does not represent the precise pattern for any particular category of property or for any particular taxing jurisdiction; neither does it depict the impact of non-valuation of both intangibles and a substantial portion of tangible personalty. assessing in Texas makes a mockery of the constitutional guarantee that ‘Taxation shall be equal and uniform.’ ” Why? There are three basic reasons for the mismatch between local assessors and public outcry. Economic power. Large corporations and wealthy families in any given jurisdiction have thousands or even tens of thousands of dollars riding on the local assessor’s valuation of property. So they pay keen attention, and they have the wherewithal to hire people to see to it that things work out in their best interest. Against these powerful taxpayers is the assessor; even if he or she were inproperty owners pay their fair share, the assessor is usually ill-equipped to take them on. University of Texas tax-law expert Mark Yudof painted this picture in a 1973 article: “Most assessors are poorly trained and lack the basic tools for competent assessment. One [1969] study of over 1,200 assessment offices revealed that only 68 assessors were professionally trained. Most did not have adequate maps, did not use building cost schedules, and did not have appraisal record cards on individual parcels. Since assessors have great difficulty valuing 6 JULY 21, 1978 large businesses, they often arrive at an assessment ratio by negotiation with the company. Moreover, assessors are typically so unprepared for oil and gas property valuation that outside firms are hired to perform the task.” Things don’t have to be this bad. The Galveston County assessor’s office, widely regarded as the best in the state, shows what is possible. Back in 1953, Dickinson banker Walter Hall launched a local crusade to overhaul the county’s property tax program so it would not victimize his GI-Bill customers, who were building new homes in the area and were not pleased with their tax assessments. Hall and his confederates forced a countywide revaluation that took four years, turned up $250 million more in taxable property, and added $1 million in tax revenues when it was completed in 1959. Galveston County also does the best job of valuing heavy industrial properties. One indication is the county assessor’s appraisal of property in Texas City, home of several huge petrochemical firms; the county’s determination of market value is some $200 million more than the local school district’s for the same property. C. R. Johnson, county assessor since the mid-’60s, set up a revaluation program focused on the county’s top ten taxpayers, including such giants as AMOCO, Union Carbide, Monsanto, Houston Lighting & Power, and Southwestern Bell. When he started in 1966, the top ten were valued at $396 million. In one year, reappraisal pushed that to $462 million. The increase for pipelines was especially dramatigvaluations more than tripled. But Galveston County has few imitators. For the most part, assessors simply capitulate, either accepting the worth reported by the big firms or, as Yudof wrote, bargaining for something a bit higher. The largest property holders in Texas tend to be huge corporations \(ofoperating in several counties with complex bookkeeping schemes, and they employ tax staffs to “work with” the local appraisers. To give you a better sense of the kind of power an assessor’s up against, here’s a list of corporations that make the Big Ten list of property taxpayers \(approxiin at least 35 Texas counties: Corporation No. of counties AMOCO 60 ARCO 47 Atcheson, Topeka & Sante Fe 35 Exxon 82 General Telephone 52 Gulf 38 Lone Star Gas 69 Mobil 60 Shell 40 Southern Pacific 38 Southwestern Bell 117 Texaco 48 ‘texas Utilities 41 When an assessor gets hold of one of these, it’s a handful. Take AMOCO, for example. It’s the oil and chemical subsidiary of Standard Oil of Indiana, the 12th largest industrial corporation in America by virtue of its $13 billion a year in sales \(double the size of our entire million a year in taxes to 200 Texas counties and 1,000 school districts. Guy Proctor, head of AMOCO’s Texas tax department, directs a seven-member staff \(an accountant, a lawyer and two secretaries in Houston and three tax administrators in Tyler, Odessa and as many tax meetings as possible in every Texas jurisdiction where AMOCO has an interest. Proctor’s pretty satisfied with the results. “We don’t always agree with the values [assessed on AMOCO property],” he says, “but it’s been a very workable system over the years.” Some firms prefer remote control. All local tax bills for Union Carbide properties, for example, have to be mailed to corporate headquarters in New York, where the “state and local tax section” reviews and responds. For these well-heeled private bureaucracies, it’s no chore to outsmart, outmaneuver andif they have tooutfight all but the toughest tax jurisdictions.