May I have a word? Appraisal reform

Texas Governor Rick Perry created the Texas Tax Force on Appraisal Reform, naming Tom Pauken to chair the advisory group. Mr Pauken is the former chairman of the Republican Party of Texas and, more recently, publisher and frequent contributor to Dallas Blog. His posts there give the lie to Gov Perry's claim that the task force not have any pre-arranged conclusions. It is clear now that the goal of the task force has little to do with "appraisal reform" and everything to do with cutting taxes and imposing state restrictions on the power of local government to set tax rates. Calling it "appraisal reform" is so much more likely to gather bipartisan support than the "Texas Tax Force on Cutting Taxes" would have. Control the language and you control the debate. But I get ahead of myself. First, some background...

Property appraisals are rising because property values are rising. The country has been in a real estate bubble. It's that simple. Texas hasn't participated in that like some other areas of the country, but property values are rising here, too. It's not a conspiracy. It's not devious plot to raise taxes. If you tax income and incomes go up, so do tax collections. If you tax wealth and property values go up, so do tax collections. Increasing incomes and wealth are good things, folks.

Appraisers do the best they can to determine fair market values, but are handicapped by one big restriction. Texas does not require sales price disclosure. The best tool for determining fair market value is to look at the prices that comparable properties sold for recently. That requires sales price disclosure. Without that tool, appraisals sometime come in well off the mark, both high and low.

Mr Pauken's task force could address the biggest problem with appraisals just by giving county appraisal boards the power to require sales disclosure. But erroneous appraisals actually serve Mr Pauken's larger purpose of state-imposed tax cuts on localities. It's in Mr Pauken's self interest to let this weakness go unaddressed. Erroneous appraisals foster taxpayer complaints against the system as a whole, creating an opportunity for Mr Pauken to "solve" the problem by recommending rate caps, revenue caps, rollback elections, instead of just giving the appraisal boards the only tool really needed for "appraisal reform".

To support his argument, Mr Pauken strangely chose to report on a recent meeting of the Cypress-Fairbanks school board, where some 300 residents turned out to protest a tax rate increase to pay for an $80 million, voter-approved, athletic stadium and multipurpose center. How this illustrates a problem needing Austin-imposed "appraisal reform" is a real stretch. This is a case where 300 residents don't like paying for what a majority of their community voted for. And they went to their school board to protest, not to Austin. Local solutions for local problems. But Mr Pauken apparently thinks the solution is to have the state require the local citizens to vote again and again and yet again, once for the school board to represent their interests, once for the bond package for the athletic stadium and multipurpose center, and now yet again to avoid rolling back taxes in the face of rising property values. I suppose if the voters again approve the tax rate, Mr Pauken will devise yet another "reform" until he gets the tax cuts that he and 300 residents are really after.

So much for "appraisal reform." Rather than discuss the issues surrounding property appraisals, Mr Pauken plays word games, using Dallas Blog like some kind of focus group to see what bumper sticker slogans are effective at building support for his and Governor Perry's pre-arranged conclusion. Mr Pauken's blogs are filled with loaded terminology like "stealth tax" and "taxpayer protections" and "appraisal reform" when the real goal is plain and simple tax cuts. Criticize Mr Pauken's proposal to impose state regulation on localities and he asks why you are against "taxpayer protections"? In the comments section of the blog, one appraisal board member called him on using the term "appraisal creep" instead of the neutral (and more accurate) term, rising property values. But don't look for Mr Pauken to change his tactics. Not if it's beneficial to demonize the appraisal boards through use of loaded terminology. Just talk about the issues, Mr Pauken and leave the word games out of it.

Appraisal Task Force Report Out Today

Capitol Letters | Mike Drago:

“The final report from the Tom Pauken-led task force on property appraisals releases its report this afternoon in a presser with Gov. Perry. Quorum Report's Harvey Kronberg obtained an early copy, which reveals few, if any, surprises.”

Ed Cognoski responds:

I've commented on this task force many times before. My bottom line has always been that Gov. Perry and Tom Pauken have used so-called appraisal reform as a cover to target their real aim: capping the growth of local government spending. That may or may not be a worthwhile cause, but it's disingenuous to use the appraisal process as a cover to attack local government.

Let's look at the task force's final recommendations to see how many deal with the appraisal process. (The quotes are from Mike Drago's story, not the task force's report itself.)

• "Require voters' approval for government spending to increase more than 5 percent year-over-year."

  EC: This has nothing to do with the appraisal process. Let the people elected by local voters do their jobs. If you don't like the budgets they draw up, vote them out and replace them. Don't trash representative government itself and institute government by referendum. It all makes one wonder: why wasn't the task force named something like "Task Force on New Restrictions on Local Government"?

• "Reform the property appraisal process by establishing minimum qualifications for appraisal board members and taking other steps to protect property owners."

  EC: There's nothing wrong with setting qualifications for these appointed positions, as long as the qualifications are professional, not political.

• "Require taxing entities to give taxpayers more specific and explicit information in their bills."

  EC: Truth-in-taxation is OK, even if it is worded in a way designed to stimulate taxpayer revolts. So be it.

• "Require the comptroller to give taxpayers better information about their rights -- notably their rights to appeal -- under the tax code."

  EC: Truth-in-taxation is OK, even if it is worded in a way designed to stimulate taxpayer revolts. So be it.

• "Change the makeup of the appraisal boards to include taxpayer representatives."

  EC: Of the current five member board, all now appointed by local taxing entities, two members would be replaced by appointments by a District Judge and one member would be replaced by the elected county tax assessor-collector. As this provides a check against potential abuse of the appraisal process by the local taxing entities, it is a reasonable recommendation.

• "Prohibit legislative actions that are in effect unfunded mandates — services that the state requires local governments to perform but does not fund. One example: Requiring school districts to lower the student-teacher ratio without providing additional money to hire more teachers."

  EC: This is a reasonable idea, but this has nothing to do with the appraisal process either.

• "Require the disclosure of property sales prices. A lack of disclosure is thought to have depressed the taxable value of property, especially on high-end residential and commercial property."

  EC: Finally, something that sounds like it will actually improve the accuracy of property appraisals in Texas. But it turns out that this recommendation technically doesn't require disclosure of the sales price at all, only the buyer's estimated value, with supporting documentation. A "liar's affidavit" in other words. Sigh.

• Give the option to city and county governments to enact a 1/2 cent sales tax dedicated to property tax reduction.

  EC: Again, this has nothing to do with the property appraisal process. I would vote against a sales tax increase because sales taxes are inherently regressive. Shifting the burden of funding local government from property taxes to sales taxes results in shifting the burden from the wealthy to the working class and poor. Nevertheless, if local voters want to choose such a scheme, the choice should be available to them. So, I accept allowing a vote on higher sales taxes, but I hope voters reject the idea.

Perry announces appraisal reform task force

My congratulations to Tom Pauken, named by Governor Rick Perry to head the Texas Task Force on Appraisal Reform, charged with making a recommendation for improving the tax appraisal process before January's session of the state legislature. On DallasBlog.com, Mr Pauken, publisher, has taken every opportunity to promote his belief that the appraisal process is broken. Now, he has a chance to shape the fix.

Let me offer Mr Pauken a few suggestions:

• Do not solve the problem by interfering with the free market. Artificially capping annual increases in appraisals would inevitably result in appraisals out of whack with selling prices and inequities between the appraised value of similar properties. Adopt such a solution and Texas will discover a few years down the road that the new system is just as broken as what it replaced.
• If you feel you must recommend a system that doesn't allow tax increases without a vote, then adjust tax rates downward rather than capping appraisal increases. If property values are rising faster than overall inflation, then automatically lower property tax rates to keep the total revenue in line with overall inflation and population growth. This removes any incentive for artificially increasing appraisals above what the market supports. Hard-working appraisal boards would be able to do their job fairly without the public assuming hikes in appraisals are a scam to raise more money. To raise more money, politicians would have to put a rate increase to the voters, giving the voters the leash on politicians that they want.
• Give appraisers the information they need to do their jobs. Make the selling prices of property a matter of public record, instead of a wild guessing game that leads to well-intentioned, but mistaken appraisals in too many cases.

Full Disclosure

Dallas Morning News | Editorials:

“Properties are supposed to be appraised at full market value. State law says so. Yet property owners are not required to disclose the price they paid. But wait a minute, you say. Isn't purchase price a pretty significant measure of market value? Yes, it is, and that is why HB 3820 needs to become law. The bill would require commercial and residential property owners to disclose purchase prices for appraisers to use, along with other information, to more accurately value property. ”

Ed Cognoski responds:

Last year, Gov Rick Perry (R-TX) created the so-called Task Force on Appraisal Reform, headed by Tom Pauken. You'd think that full disclosure would be that body's number one reform recommendation, if it truly was focused on appraisal reform. After all, full disclosure is the single best tool appraisers can have to ensure tax equity. Full disclosure eliminates much of the guesswork in the appraisal process that now tends to undervalue rich estates and business property. If those properties are undervalued, the tax burden on middle-class homeowners must go higher to pick up the slack.

There's something that looks something like full disclosure in the task force's recommendations. But it turns out that this recommendation technically doesn't require disclosure of the sales price at all, only the buyer's estimated value, with supporting documentation. A "liar's affidavit" in other words.

How did this happen? Instead of actually trying to improve the appraisal process, the task force instead was used as a cover to target Mr Pauken's and Gov Perry's real aim: capping the growth of local government spending. Maybe that's a good goal. Maybe it isn't. But it isn't appraisal reform.

More and more Texans are realizing that local government is being asked to do more and more with less and less resources. The mood for more tax cutting is less and less favorable. So, the Governor decided that tax cutting now needs to be disguised as appraisal reform in order to get voter support. After all, nobody likes paying higher property taxes, even if it's because of appreciating property values.

Mr Pauken and Gov Perry have shown they understand how politics work. Unfortunately, it's not through full disclosure of their real aims. Otherwise full disclosure of real estate selling prices would be easily passed by the Texas legislature.

For past articles on this subject, see here.

Craddick calls for gubernatorial commission on appraisals

DallasBlog.com:

“Speaker Tom Craddick is calling for the creation of a gubernatorial commission on appraisal issues in Texas. Craddick first called for the commission during his speech to delegates at the Republican state convention. ‘The average person out there is seeing their appraisals going up and up, and they are leery of (promised) tax cuts because it’s just going to be (eaten up) by appraisal creep,’ Craddick told the San Antonio Express News.”

Ed Cognoski responds:

For sure, a commission is needed. But not to handicap appraisal districts more than they are already are. Appraisal districts are prevented by law from having access to all the sales data they need to set accurate appraisals. Still, they seem to be doing a reasonable job, anyway, despite the common belief that appraisals are being jacked up to raise taxes. The Dallas Central Appraisal District says appraisals increased 6%, on average, in Dallas County this year. Compare that with what's happening to sales prices. Appraisals are going up because property values go up, whether you spend money on improvements or not. There's a real estate bubble in this country. It hasn't entirely bypassed Dallas County. For most homeowners (i.e., those that don't plan on dying in their current home), that's a good thing.

The appraisers don't always get it right, house by house. But it's not because they are out of control, aggressive, arbitrary, whatever. It's because they are denied by law from getting access to all the sales data. If you want appraisal districts to do a more accurate job in every neighborhood, press legislators to give them the sales data the local appraisers need, not to put yet more artificial caps on appraisals. That will lead only to even more cock-eyed results than what people believe is happening already.

Where's The Tax Relief

TylerPaper.com | Roy Maynard:

“The architect of property appraisal reform says he's disappointed a powerful committee chairman is blocking all but a few cosmetic changes to the system. ... 'I don't think appraisal reform is dead yet, but I'm very, very concerned,' Pauken says. 'Rep. Fred Hill has made it very difficult to get anything done. You can't talk to him. He's very hard-headed on this issue. For all practical purposes, he's become the spokesman of the Texas Municipal League and the Texas Association of Counties.' ... For his part, Hill tells the Tyler paper he's not completely opposed to tweaking the system. 'But I am against revenue caps, which restrict the abilities of cities and counties to do their jobs,' Hill says. 'And I'm against appraisal caps, which don't do anything except distort the market.'”

Ed Cognoski responds:

Hooray for Rep. Fred Hill (R-Richardson) for standing up to Tom Pauken's mischaracterization of the issue and TylerPaper.com's obliging story.

The headline asks "Where's the tax relief?" but Tom Pauken's task force was not called the Task Force on Tax Relief or the Task Force on Capping Local Government. It was called the Task Force on Appraisal Reform. Yet, getting fair and accurate property appraisals has taken a back seat to handicapping local government. Mr Pauken only used rising property values as an opening to achieve his real aim, capping local government revenues and expenditures.

Roy Maynard sets the stage by introducing Mr Pauken as the "architect of property appraisal reform" (read white hat) and Rep Hill as "a powerful committee chairman" (read black hat). He allows Mr Pauken to throw ad hominem attacks at Rep Hill, calling him hard-headed and hard to talk to, without asking for evidence that Mr Pauken has ever listened to anyone himself. His task force's road show around the state in 2006, supposedly seeking citizen input, ignored inputs from cities and counties. His goal of putting arbitrary caps on local government - revenues, expenditures, appraisals - was predetermined and comes through loud and clear in the task force recommendations.

Rep. Fred Hill of Richardson is now standing up for local government, for city councils and school boards and the voters who elect them, all those who weren't listened to by Mr Pauken in 2006. Mr Pauken paints Rep Hill's responsiveness to his constituents as a bad thing. All Texans are first residents of their towns, cities and counties. It's about time they had representatives in Austin who stand up for them. For Tom Pauken to paint Rep Hill as a mere "spokesman" for the cities and counties we all live in shows how little regard Mr Pauken has for local government. Mr Pauken himself appears to be nothing more than a spokesman for Governor Perry, for Austin, for state control of local government. An unelected spokesman at that. Hooray for elected representatives like Fred Hill.

Satire; Property taxes

The Nightly Build...

---

ABC and Comedy Central: Is There a Difference?

The Dallas Morning News published an editorial praising Jon Stewart as a satirist.

"Satire done well uses the comic's tools to drive a larger point, usually about how absurd the bill of goods someone, including Washington someones, is selling us. Satire gone overboard leaves you feeling as if everyone's selling you a bill of goods - so what's the point of voting, campaigning and contributing? After years of honing his style, Mr. Stewart does the best job of finding the satirists' sweet spot."

A serious editorial on the oh-so-serious pages of a major metropolitan daily newspaper about ... a comedy show on Comedy Central cable television. Satire has arrived. Political campaigns today are so ripe for satire that the candidates seek to participate in the lampooning. Stephen Colbert managed to book John Edwards, Hillary Clinton and Barack Obama on his television show the same night, his last night covering the Pennsylvania primary on location in Philadelphia.

It's not just the candidates themselves who provide the fodder for satire. The supposedly serious news media's coverage of the campaign is sometimes hard to distinguish from the comedians' coverage. Jon Stewart provides the best take on the descent of network news, with his summary of ABC's debate between Barack Obama and Hillary Clinton, hosted by Charles Gibson and George Stephanopoulis:

"The first hour of last night's debate was a sixty minute master class in questions that elevate out-of-context remarks and trivial, insipid, miscues into subjects of national discourse, WHICH IS MY JOB. STOP DOING MY JOB. That's what I'm here for. I'm the silly man."

---

Someone Is Getting a Property Tax Break, Just Not You

On The Dallas Morning News Metro blog, Steve Blow posts an addendum to his column Sunday on commercial property appraisals in Dallas. He adds the city is in process of buying downtown property for the proposed convention center hotel for $41 million, more than five times its officially appraised value. Some commercial real estate owner has been getting a sweet deal on his property tax bills.

Two years ago, Gov. Rick Perry appointed a task force to study appraisal reform. Lack of disclosure of real estate sales price information, especially commercial, leads to many properties being grossly undervalued like the example above. Average homeowners, for whom it's harder to hide the true value of their own houses, end up having to bear a higher tax rate to compensate. You'd think the governor's task would have highlighted this problem. You'd think the task force's first priority would have been to get accuracy in appraisals. You'd have guessed wrong. The task force buried it under other careabouts, such as capping appraisal increases and putting appraisal boards under partisan political control. The result would have been more room to manipulate the process, more opportunities for setting appraised values far short of market values for favored special interests.

The governor's task force was led by Tom "Let's cap taxes and call it appraisal reform" Pauken, who is owner of Dallas Blog, which this weekend published an article by Will Lutz that begins, "Texans are hopping mad about high property taxes." Lutz uses that premise to renew Pauken's push for partisan political control of appraisal boards. Not a word from Lutz about mandatory sales price disclosure. There's a grossly under-appraised $41 million piece of real estate in downtown Dallas that suggests just how big the prize is in this political battle. Rick Perry, Tom Pauken, and Will Lutz intend to win it.

Long lines at appraisal district

DallasBlog.com | Tom Pauken:

“Those seeking to challenge the appraised values on their property have only a few days left to do so. ... If today is any indication, a lot of Dallas County property owners were at the Appraisal District office disputing their appraised values for 2006. ”

Ed Cognoski responds:

Instead of the anecdotal evidence offered by Mr Pauken, we need a systematic study. And for that, we need sales price data, which is not public information in the state of Texas. In fact, the information is not available to even government appraisal boards, unless it is voluntarily offered by homeowners. So, instead of whining about "unelected" appraisal boards "jacking-up" appraisals for "no discernable reason", Mr Pauken ought to be lobbying to get the appraisal boards the information they need to set accurate appraisals.

Until then, we're left with anecdotal horror stories. And for every victimized homeowner that Mr Pauken cites, there's another story of a wealthy homeowner or a commercial real estate owner taking advantage of the current system. For example, there's the office tower at 300 W. Sixth St. in Austin, whose owner complained when its appraised value increased 40 percent to $65 million, only to turn around and sell it a short time later for $131 million.

Kiss-the-rich, kick-the-middle-class

MySA.com | Roddy Stinson:

“Pardon me while I spend a despairing moment contemplating the many ways that Texas House Speaker Tom Craddick and his kiss-the-rich, kick-the-middle-class Republican henchmen will find to kill any attempt to pass a sale price disclosure bill.”

Ed Cognoski responds:

Without sale price disclosure, estimating market value of real estate is mostly guesswork. In middle-class neighborhoods, where the houses are similar and many sell each year, appraisal boards can usually get the information they need to make this guesswork pretty accurate. In wealthy neighborhoods, where the houses are unique and sales less frequent, it's more difficult to estimate market value. When mansions are listed, it's often discovered that the asking price is much higher than the appraised value on the tax rolls. And commercial properties often sell with complex contracts, confidentiality agreements, and other means that prevent appraisers from doing their jobs.

Roddy Stinson doesn't predict how Republicans will kill a sale price disclosure bill, only that they will. In my opinion, they'll do it by distorting appraisal reform into their preferred goal — tax cutting.

Gov Perry set up a commission chaired by Tom Pauken for the supposed purpose of reforming the appraisal process in Texas. You might think that sale price disclosure would be the number one item in their reform recommendations. No brainer, even. But no. Mr Pauken's road show is traveling Texas whipping voters into a frenzy to cap local government revenues.

Expect Perry and Craddick to accept Pauken's recommendations, push the local government revenue caps through the legislature, and claim to be reforming the appraisal process. Sale price disclosure will end up on the floor.

The result will be handicapped local government and a shift of more of the tax burden from property tax to sales tax, from the wealthy to the middle and lower classes.

And Governor Perry will thank Mr Pauken for his service, his service to those "kiss-the-rich, kick-the-middle-class Republican henchmen" that Roddy Stinson talks about.

Would you swap property taxes for sales taxes?

Tom Pauken, chair of the Texas Task Force on Appraisal Reform, says that the "the key to passing reform is producing a package of legislation, rather than focusing on the individual parts." OK, let's look at the whole package...

• Mandatory sales price disclosure: Good because it leads to accurate appraisals.
• Appraisal caps: Bad, because it distorts the real estate market.
• Revenue caps: Maybe. But let state legislators start by imposing a state revenue cap, just to show the local governments how well it works.

  And don't require a local referendum to set rates that will exceed those revenue caps. Government by referendum is how California is governed. Instead, just require local government officials to publicly vote on the tax rate each year. Voters can decide themselves to throw the bums out if they vote wrong.

• Direct election of appraisal boards: Bad because it politicizes the appraisal process. If the goal is accurate appraisals, this won't lead to it. Appraisers should be tasked with providing fair and accurate appraisals, not pleasing voters.
• Local option property tax-sales tax swap: Bad because Texas already relies too heavily on regressive sales taxes. Broad-based taxation is good. The last Legislature shifted some of the property tax burden to business. If more shift is needed, it's time to consider an income tax, the one leg of the table not yet holding any of the weight.

It's a Value Judgment

Dallas Morning News | Editorials:

“While state law requires properties to be appraised at full market value, property owners are not required to disclose the price at which properties – especially commercial ones – are bought and sold. ... The Texas Association of Appraisal Districts says commercial properties therefore are undervalued, costing school districts and other taxing bodies billions of tax dollars each year. Worse, the group says, the tax burden shifts to residential homeowners, especially those whose properties are assessed close to market value.”

Ed Cognoski responds:

If Texas wants to rely on property taxes to fund government, Texas ought to demand the information needed to accurately appraise the value of property. This should be a no-brainer. But be careful. Taxpayers are so suspicious of government that they will see this as a scheme by appraisal districts to jack up appraisals. The Dallas Morning News practically comes right out and says so.

The Dallas Morning News rightly warns taxing authorities not to use mandatory disclosure of sales prices as an excuse to create a revenue windfall. Appraisal districts are doing a lousy job of convincing taxpayers that's not their plan, that residential homeowners are likely to benefit from this change. Maybe that's because there's some basis to the fear. Maybe some taxing authorities are salivating over the prospect of increased revenues. If so, we risk ending up with no sales disclosures and movements to cap local tax revenues or, worse, tax rates. That leads to the worst of both worlds – an unfairly distributed tax burden and underfunded local governments.

Come on, appraisal districts. Give us reason to believe you can be trusted to use this new power frugally.

Appraisal reform; National sales tax; Strip clubs

The Nightly Build...

---

Conflicts of Interest?

Tom Pauken couldn't get what he wanted in the last Texas legislative session so now he's attacking the legislators personally.

Tom Pauken wanted to handcuff local governments in the name of "appraisal reform". Property taxes are based on property value. When property values go up, so do property taxes, unless the taxing authorities cut rates. Pauken doesn't like the fact that elected representatives aren't cutting rates fast enough to suit him, so he wants to restrict their powers. Why doesn't he just ask voter to turn them out of office? Why, indeed? Maybe because he knows that local voters like their local representatives.

If Pauken can't get local voters to elect people who'll do what Pauken wants, and he can't get state legislators to force local government to do what Pauken wants, what's his next tactic? It's to personally attack the state legislators, which he does in a Dallas Blog column accusing two of Pauken's leading opponents of conflicts of interest. Sensing the charge might be too subtle for voters to get worked up about, Pauken also accuses one, Mike Villareal, of being "rude" to the point of "obnoxiousness". (Oh my!) He says Villareal was uncooperative with Pauken's traveling marketing campaign last year. (Double oh my!)

Pauken conveniently neglects to mention that Mike Villareal strongly supported mandatory sales disclosure. If you want "appraisal reform", the nominal subject of Pauken's failed task force, then you have to start with accurate appraisals. And nothing will advance that goal better than mandatory sales disclosure. This reform was not pushed by Pauken. Pauken doesn't attack legislators who fought against this reform. No, he attacks a legislator who fought for it.

Pauken has his own agenda here that he's not revealing and it's not appraisal reform.

---

Scott Burns' Picks: Gravel and Paul

The wisdom of The Dallas Morning News' personal finance columnist Scott Burns is at its best when advising individuals about credit card use, but the quality tails off when advising the country about national politics. His advice about the 2008 Presidential election should be approached with great caution. He asks voters to consider Sen. Mike Gravel and Rep. Ron Paul. Really.

First, he advises voting for a candidate who wants to replace our current income tax with a national sales tax. The intended effect is to encourage saving over consumption. That would be good. But an unintended side effect would be to increase inequality. That would be bad.

Assuming any such plan is revenue neutral, if someone ends up paying less tax, someone else has to pay more. With a sales tax, people who save more would pay less taxes. People who save less, would pay more. In today's world, who saves more - the rich or the poor? So, even though a national sales tax would encourage everyone, rich or poor, to save more, the result of this proposal will be to favor the rich at the expense of the poor and middle class. Not such a good idea. Talk of compensating for this by making cash grants to the poor is simply an admission that the plan is highly regressive in nature. No thanks.

Second, Burns recommends voting out of office anyone who voted for Social Security reform in 1983, for making decades of overspending and lies possible. Instead, how about targeting the politicians who did the actual overspending and lying? Remember the Clinton Presidency, where the budget deficits of Reagan and Bush senior gradually gave way to budget surpluses? Remember the 2000 campaign, when Al Gore proposed using the coming budget surpluses to pay down the national debt and George Bush proposed leaving the debt in place and returning the annual surpluses in the form of tax cuts? Remember the years since when a Republican President and a Republican Congress oversaw a ballooning of federal debt? The sins we are paying for now weren't committed in 1983.

---

Strip Clubs: If you can't close 'em, tax 'em

Frontburner's Trey Garrison doesn't think much of a proposed state-mandated $5 cover charge at strip clubs to pay for sexual assault prevention programs. He says that the director of Texas Association Against Sexual Assault (TAASA), which is behind the proposal, "believes in her cause so much that she's unhesitant to dig deep into other people's pockets to pay for it."

Well, that libertarian viewpoint is one way to look at it, I suppose. I don't have that same knee-jerk reaction against communities trying to uphold a certain quality of life by means like this. TAASA probably thinks that strip clubs directly contribute to sexual assaults, so taxing strip club patrons is a way of making them pay to clean up the harm that results from them being in business. Or perhaps TAASA believes that the tax will discourage attendance, thus reducing the number of sexual assaults that occur. This community strategy could be justified, similar to the strategy of taxing cigarettes and alcohol, provided there's some evidence that the underlying assumption is true -- that strip clubs lead to sexual assaults. I haven't seen any such evidence and I doubt TAASA has any.

School District and Landowner Embroiled In East Texas Land Dispute

KLTV.com | Tracy Watler:

“Henderson ISD has plans to build a new primary school, but they say in order to do so, they need a certain four acres, owned by a city councilman. But that councilman says the school's offer is just not good enough. ... The Rusk County Appraisal District says Ashmore's land is worth just 3,000 dollars an acre. ... 'We definitely feel like, from what we've been told, that $15,000 per acres for these four acres is a fair amount of money to offer for that property,' says [Henderson ISD Superintendent Tommy] Alexander. But Ashmore doesn't think so. That's why he's asking for $150,000.”

Ed Cognoski responds:

Let me see if I've got this straight. The councilman has been paying property on land that's appraised at $3000/acre. A buyer offers hims $15,000/acre. He says his land is really worth $37,500/acre.

Knowing nothing more, if I were the arbiter, I would award him the $15,000 and tell him he's lucky the city doesn't take his land for the value he's been happy paying taxes on — $3,000/acre.

Governor Perry's so-called Task Force on Appraisal Reform is beating the drums to strangle the growth of local government. If they took seriously the title of their task force, appraisal reform, they would be doing something to stop abuses like this in Tyler. When landowners like this city councilman are underpaying their property taxes by, what, 10x?, that means those taxes are shifted onto someone else, probably the homeowners in Tyler, who can't hide the true value of their homes as easily as this city councilman has.

The most obvious way to achieve more accurate property appraisals is public sale price disclosure. Only when appraisers can see what properties actually sell for can they accurately set a value.

In cases like this undeveloped land in Tyler, whose situation is unique, perhaps other reforms are necessary. Perhaps landowners should be required to accept the appraised value when their land is taken by eminent domain. If he's been happily underpaying his property taxes, he ought to be happy accepting less than true market value. On the other hand, if the landowner wants government to pay him an outrageous sum for his land, he at least ought to have been paying property taxes on it in like amount. If he hasn't been, he has no right to complain he's being cheated now.

Vote Yes on Proposition 3

Dallasblog.com | Tom Pauken:

“I encourage all Texans to vote yes in support of Proposition 3 on November 6. We need to protect our homeowners from the negative impact of skyrocketing appraisal values.”

Ed Cognoski responds:

Vote No on Proposition 3.

Tom Pauken is upset that his property taxes are going up. Then, he ought to vote out of office the politicians responsible for setting tax rates. Instead, he wants to mess with free market forces by artificially capping property appraisals.

In a fair tax system, two houses with equal market values would be taxed the same amount. But not in Tom Pauken's world. He wants to cap appraisal increases at an arbitary 10%, no matter how much a property might be worth. Eventually, the homeowners of two houses of equal market value could be paying wildly different taxes because of this artificial interference with the free market.

I can't imagine Tom Pauken recommending that government adopt wage and price controls. Yet his recommendation to cap appraisals on house values amounts to that. The distortions caused won't be noticeable at first, but sooner or later someone else will have to clean up Tom Pauken's mess and restore market sanity to the appraisal process. Vote No on Proposition 3.

P.S. Tom Pauken continues to block me from posting comments on Dallas Blog.

Why Can't a GOP Legislature Act the Part?

Dallasblog.com | William Murchison:

“Where were the conservatives? Where were the Republicans? ... Why didn't property tax revenue caps and appraisal caps pass? ... Legislative restraints on the ability of local government to take advantage of rising home sale prices should have been a key priority for a conservative-dominated legislature.”

Ed Cognoski responds:

If local government is "taking advantage" of rising home sale prices, voters already have a proven remedy — vote the rascals out. Conservatives always claim they want less government, but when in power they are just as willing as liberals to use government power to interfere with market forces to get what they want.

In this case, it's appraisal caps. Conservatives want us to pretend that real estate prices aren't rising. Let's lock in property taxes at current appraisals. Who benefits the most? Those lucky enough to own houses in fast-growing exurbs and wealthy enclaves. Who benefits the least? The middle-class and lower who live in slowly decaying cities and older suburbs where property values rise more slowly. Where do the conservatives suggest the lost property taxes be made up? In sales taxes, a largely regressive tax that hits lower income citizens hardest.

Legislators who resisted the deceptive attempt to shift the tax burden from the wealthy to the middle class under the banner of appraisal reform deserve our praise, not our criticism.

Texas Assoc. of Counties spokesperson attacks Governor Perry's appraisal reform efforts

After Tuesday's elections, it didn't take long for proponents of state interference in local government to misrepresent opponents' views when it comes to the local property tax appraisal system that Texas Governor Rick Perry hopes to rewrite from Austin.

Tom Pauken, chairman of Governor Rick Perry's committee on so-called property appraisal reform, in a Dallas Blog column, casts those with differing views as being against giving local voters a meaningful say in property tax policy. In truth, it's activists like Tom Pauken who are trying to force state government solutions on local government.

Local voters already have all the power they need to elect representatives who will be responsive to voters' wishes. Tuesday's huge reversal in political party control in Dallas County illustrates just how much power voters can wield when they decide they want change. Instead, Mr Pauken tries to impose change on how local communities govern themselves, not by putting changes to local charters before local voters, but through the machinations of an unelected commission appointed by an unpopular Governor whom a large majority of Texans rejected at the ballot box Tuesday.

Incredibly, Mr Pauken ignores the lessons of November 7 and tries to pretend that local voters need Governor Perry and Austin legislators to protect them from their own decisions at the ballot box in electing community leaders, friends and neighbors, to represent their interests on city councils and school boards. The display of local voter power on November 7 demolished Mr Pauken's premise that local citizens need help from outsiders in Austin. Let local issues be decided locally, Mr Pauken. Let Austin get its own house in order before it tries to impose more state solutions for local problems.

Appraisal reform battle

Dallas Blog | Tom Pauken:

“Terrence Stutz has a very fair and balanced analysis in Monday's Dallas Morning News of the Governor's Task Force on Appraisal Reform's efforts to address the problem of skyrocketing property taxes in Texas. ... State Representative Fred Hill, who has become the principle spokesman for the Texas Municipal League in the Texas House, makes an absolutely ludicrous statement in the Stutz article by saying that any such restraint on the growth of local government spending would actually lead to greater tax increases at the local level.”

Ed Cognoski responds:

Definition of "fair and balanced": agreeing with Perry and Pauken (see Terrence Stutz quoting Tom Pauken).

Definition of "ludicrous": having the temerity to disagree (see Fred Hill).

Actually, Terrence Stutz does a decent job of presenting both sides of the issue without the loaded adjectives that Mr Pauken piles on. Mr Stutz gives Tom Pauken more space in his story, but at least he allows Fred Hill to respond. Mr Pauken's account of the The Dallas Morning News' story is anything but fair and balanced. My advice? Skip the Tom Pauken account and go straight to the DMN.

Tom Pauken, in Dallas Blog, calls Fred Hill's position ludicrous without ever explaining his position. Actually, Fred Hill makes sense. He argues that if you cap local government revenue increases at 5%, that's what you're likely to get, whether the need is 3% or 4%. Local governments will be tempted to build a bit of a surplus, just in case next year the need is 6% and the new law caps them at 5%. That inclination to reach for that 5% cap could very well lead to higher taxes over the long run.

So, why does the Texas Municipal League in the Texas House oppose this? Because Fred Hill is looking out for the local taxpayer's interest. He knows the law of unintended consequences can bite back when you start putting artificial ceilings and formulas in place instead of just electing good people to represent you in the first place. Fred Hill was elected just that way. The Task Force on Appraisal Reform was appointed. By an unpopular governor, no less. Who do you trust?

Is this your idea of reform?

Star-Telegram | Jack Z. Smith :

“I'll have to admit that Texas Gov. Rick Perry's Task Force on Appraisal Reform isn't as bad as I thought it would be. It's worse. The task force, which held its final meeting on Tuesday in Austin, is expected to issue recommendations in a report late this year, panel Chairman Tom Pauken said. Oh, boy -- can't wait.”

Mr Smith does a good job laying out the impact of this so-called reform. It would shift the tax burden from those whose houses are rising rapidly in value to those whose home values are stagnant. Affluent homeowners with expensive homes would benefit most. Low- and moderate-income Texans would benefit least and may, in fact, end up paying even more in taxes if sales taxes replace property taxes.

Mr Smith presents some numbers that indicate even Gov Perry's premise of a problem is suspect.

"Appraisal district figures released in July showed that 58 percent of single-family houses in Tarrant County had no change in value this year. Values decreased for 5.5 percent of homes. Of the 36.5 percent of homes that increased in value, only about one in 25 rose more than 10 percent."

Local government officials are almost uniformly opposed to this interference by state government in local government affairs. When someone from Austin knocks at your door and says he's here to help, watch your wallet. It's being sold as "appraisal reform" and "taxpayer rights". But what Texas will end up buying is a shift of the tax burden to low- and moderate-income Texans.

Censorship at Dallas Blog - yet again

In 2006, Tom Pauken of Dallas Blog was named chairman of something called the Task Force on Appraisal Reform. On January 23, 2007, the task force submitted its recommendations to Governor Rick Perry.

I posted my own analysis of those recommendations on my own blog here. I concluded that Gov. Perry and Tom Pauken used so-called appraisal reform as a cover to target their real aim: capping the growth of local government spending. Nevertheless, there were one or two recommendations that I found I could support.

Mr Pauken's recommendations have now disappeared into the maw of legislative sausage-making. When and how they will reappear is unknown. Today, Mr Pauken, trying to spur some action, posted a blog entry on his Dallas Blog calling on readers to let their legislator know that "appraisal reform" (sic) should be the top priority of the 80^th session of the Texas legislature. Nothing has changed on this issue since the task force issued its report. Mr Pauken's posting today offers nothing new, except to bemoan the fact that other issues are getting more press than his pet issue: new coal plants by TXU, mandatory HPV vaccinations, and sale of the state lottery.

Mr Pauken wants to control the debate on this issue. Moderation is turned on for any comments in response to his lobbying for reader action, meaning editor approval is necessary before any comments are posted. I submitted a link to my earlier analysis. That link was not approved by Mr Pauken. No explanation as to why. Just ... nothing. I leave it to readers to determine what Dallas Blog blogging policy I violated. The heavy hand of censorship at Dallas Blog is still suppressing open dialog.

DMN Web traffic; Property taxes; Do-Nothing Republicans

The Nightly Build...

---

Yes, It's All Those Pop-Up Ads

Unfair Park's Robert Wilonsky passes on a story from Editor & Publisher that Web traffic has dropped 18% for The Dallas Morning News's Web site. Not good for a business that desperately needs to reinvent itself -- away from dead tree publisher to online content provider.

Wilonsky suggests, only half-jokingly, that the exodus is caused by pop-up ads. That's part of it, I'm sure. The News' home page is cluttered with ads; filled with redundant, confusing, navigation aids; littered with links to stories; but there's precious little to actually read on the home page.

After clicking and surfing for a while, you realize that the journalists at The Dallas Morning News have been gradually disappearing over the years, replaced by more and more wire service stories that you can get anywhere. There's no there, there.

Journalists who are left are trying to reinvent themselves as bloggers. The News has gone to blogs in a big way. The layout of the blogs had been a little cleaner than the home page, but they too have recently been made over to have all the clutter of the home page. And the blogs have been plagued by little bugs. Try to file a comment, click the preview button, then find that you cannot post from the preview screen. Reader comments are being automatically filtered into the moderators' spam folders. Sometimes the moderator just deletes them without notice. When they do show up, you have to really want to read them to find them. Reading the blogs becomes an endless chore of clicking on a blog to see the comments, clicking on your browser's "back" button to go back to the blog, clicking on another story to see its comment thread, and on and on. Blogs that have dozens of posts per day become too tiresome to read.

It seems that more and more, the only time I find myself reading something on the News Web site is when another local blog links to it. Not a good sign for the future of Dallas' only daily newspaper.

---

Who's To Blame For High Property Taxes?

Tom Pauken is whining again about property taxes. He led the governor's Task Force on Appraisal Reform last year, whose recommendations were largely ignored by the legislature for all sorts of reasons, mainly because they had nothing to do with appraisal reform and everything to do with messing with the free market and hamstringing local government in an effort to cut taxes. In fact, the one proposal aimed at ensuring accurate appraisals (sales disclosure) was sponsored by the legislator that Pauken attacks for obstructionism. Middle class houses tend to be fairly appraised already. It's the upper class homes that are typically undervalued. Yet Tom Pauken shows little interest in fair appraisals and a lot of interest in keeping appraisals of those upper class homes from being fairly appraised. For more information on this subject, search this blog for past stories on the subject.

Coincidentally, Dallas Business Journal reported today that Texas collected 9.5% more sales tax this November than it did a year ago. Do you see Tom Pauken complaining about this windfall for state and local governments? Do you see Tom Pauken lobbying for a cut in the state sales tax? No and no.

Why? Sales taxes tend to be regressive. The poor spend more of their income; the rich tend to save more. Sales taxes hit expenditures, not saving. Property taxes, on the other hand, tend to be progressive. The rich pay more because they tend to own more property and their houses tend to be bigger and more lavish. Tom Pauken's lobbying campaign for capping appraisal increases would have the effect of shifting more of the tax burden from the rich to the poor and middle class. He doesn't say that's his goal, but one has to believe that he's well aware of this result and would be happy with it. So, as long as Tom Pauken is whining, the average Texan has reason to be happy.

---

Sen. Coburn Threatens to Throw Himself into Traffic

Tom McGregor, of Dallas Blog, reports that Oklahoma's Republican Senator Tom Coburn "has threatened to throw himself into traffic to slow down the rush of legislative bills that are going through Capitol Hill right now."

First, voters should have no doubt about which party is to blame for this Congress not getting done what voters sent them to Washington to do. The Republicans are going to have to defend their obstruction of the people's will in November, 2008. Senator Tom Coburn is the poster child for the do-nothing Republicans.

Second, would Sen. Coburn throwing himself into traffic be such a bad thing?