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.