Last year, 61 parcels of land in Travis County were designated as ecology laboratories for research purposes, which saved the 22 owners thousands of dollars in property taxes. But this year, every one of those ecolab exemptions was denied after the Travis County Central Appraisal District determined that they weren’t legitimate. A couple have been reinstated since they were pulled, and other property owners may sue, but there is a fundamental problem with the state’s ecolab and wildlife preservation tax exemptions: It is hard to know whether they are legitimate.
Texas also provides tax exemptions for agricultural and ranch land, tax breaks that can be abused as well. An article in Saturday’s Wall Street Journal focused on corporations that set aside acreage in Texas to graze cattle or as wildlife habitat to get sizeable tax breaks.
Samsung Electronics lists 54 acres adjoining its plant as wildlife habitat, saving the company $21,000 in property taxes, according to the Journal. Dell Inc. receives an agricultural exemption on 65 acres it has in crop production at its plant site. And Hospira, Inc.’s land at the former Abbott Laboratories site in North Austin includes land for grazing cattle, which saved the company $48,000 in taxes last year.
Agricultural, wildlife and ecolab exemptions are popular because property is the primary base for revenue in Texas, a state with no income tax. As property values rise, so do the taxes paid to cities, counties, schools, hospital districts and community colleges. Landowners are always looking for ways to lower their tax bills.
Texas also has a minimal amount of public land in the form of parks and green space, since 95 percent of the state is privately owned. So lawmakers have cobbled together the agriculture, wildlife and ecolab exemptions as a way to maintain green belts, open space and wildlife habitat.
Today, Exxon Mobil Corp., one of the most profitable companies in the world, takes advantage of those exemptions by grazing cattle and growing trees around its old oil fields. The appraised value of its agriculturally exempted property in Harris County dropped from $38 million to $1.2 million.
As well-intentioned as these laws may be, they are ripe for abuse. To receive an exemption, the land must be used “wholly or in part” for crops, livestock or wildlife preservation. That’s an open-ended invitation to graze a couple of longhorn steers on lots around a valuable industrial plant.
It helps that the penalties are steep for discontinuing an agricultural exemption to develop the property. Owners have to pay full back taxes for five years, plus interest, though that wouldn’t discourage someone intent on profiting from the land.
When it comes to wildlife and ecolab exemptions, appraisers are at an even greater disadvantage. Property owners have to do very little to comply with the law, and it’s difficult for appraisers to determine compliance. For instance, owners of property with a wildlife exemption must conduct a wildlife census, but there’s no way for appraisers to know whether that actually occurred.
“It’s hard to monitor and hard to know,” said Art Cory, chief appraiser with the Travis appraisal district.
The idea behind the exemptions is to maintain shrinking agricultural and ranch land and wildlife habitat by lowering its taxable value, thus reducing the taxes on it. But there should be better, and more honest, ways to do that than the wildlife and ecolab exemptions.
Allowing individuals ˜ or multinational corporations ˜ a huge tax break because they hang a few birdhouses in the trees or graze a few head of cattle is not good governance. And it is cheating local government and school districts out of millions of dollars each year.
*****The previous was reprinted from the Austin American Statesman, Austin, Texas.
There are at least three critical omissions from your editorial about special property tax valuations for agriculture and wildlife management in Texas.
1. Open space is cost effective. As an example, let’s use all of the acres receiving ag or wildlife valuations featured in your article. What you ignored is those acres require no government services. Those cattle and songbirds don’t go to school, nor shoot themselves up in the barrooms on Saturday night, nor require the Medivac helicopters after smashups out on the highway. Fill those acres with apartments, condos, and shopping centers, and the tax dollars they bring in never equals the amounts needed by government to pay out in services.
2. Open space has value beyond tax revenues. For a few examples, open space not only supplies food, fiber, and shelter, but also aquifer infiltration, carbon sequestration, recreation, aesthetics, scenic views, wildlife habitat, and reduction of silt and pollutants into creeks, streams, river, lakes, bays, and estuaries.
3. Open space is collateral for loans. End the programs in your article, and what happens? All the acres receiving the special valuation go on the market. The Wall Street Journal (whose name is evoked in your editorial), of all publications, should know what happens next: All such land becomes devalued. What happens to the tax base then? Moreover, most of these acres are securing notes. Devalue collateral and most of the loans become non-complying. Do that and we’ll end up with the late 1980s all over again, with a lending institution crises requiring another RTC-type bailout.
Finally, the ag/wildlife valuation is NOT a tax “exemption,” even if the code refers to it that way. In reality, it is a special valuation, constitutionally afforded to the owners of open space, regardless whether they farm, manage for livestock or wildlife. Furthermore, all of us citizens using this tax valuation pay exactly the same taxes on our homes, garages, barns, and other improvements as do the citizens who don’t have rural acreage! It’s only the open space that receives the special valuation.
With the shortsightedness exemplified by your editorial, it’s no wonder rural America is being fragmented and covered with asphalt.
Having said this, if anyone is, in fact, cheating on paying their fair share of taxes, they should be horse-whipped. And, I’d like a turn with the lash.
David K. Langford, Vice President Emeritus
Texas Wildlife Association
P.O. Box 1059
San Antonio, TX 78218