The total taxable value among Gaines County’s 11 taxing entities saw a $7.96 billion decline between the 2015 and 2016 assessment years, according to figures released earlier this week by the Gaines County Appraisal District.
A decline, according to one official charged with handling the mineral assessment on behalf of the GCAD, that is directly pointed to a continuation of low global oil prices and expenses associated with the continued production of oil and gas leases within the county.
According to figures released by the GCAD, Gaines County’s total certified taxable value for 2016 — which includes total mineral/property valuations for all 11 Gaines County taxing entities — was quoted at $17.73 billion.
In 2015, the total mineral/property valuations for those same entities was $25.7 billion.
“It’s a significant decline when you look at the whole picture,” said Kenneth Hitt, a petroleum engineer who assesses mineral valuations for Capital Assessments in a Monday morning discussion of the latest figures given to members of the Gaines County Commissioners Court.
Capital Assessments, an Austin-based mineral valuation firm, is contracted with the GCAD and numerous other counties across the State of Texas to perform the annual mineral assessments for the districts’ respective taxable valuation certification process.
Hitt, in Monday morning’s discussion with local leaders — which included representatives from the Seminole Independent School District and Seminole Hospital District — said that while preliminary assessments earlier this year projected declines based on global oil market numbers, the surprise came in the lack of change in oil companies’ expenses in relation to the market declines over the past 18 months.
“We were anticipating to see a drop in those expenses, and that didn’t happen after we began to see those operation numbers from the oil companies,” said Hitt.
After seeing a 23.9-percent decline in operating costs — one of five variables used in the establishment of mineral values — in the 2015 cycle, Hitt stated local oil companies only reported a 7.3-percent decline in operating costs for the 2016 reporting term.
“If we were playing cards in (Las) Vegas, we would have certainly lost hand,” said Hitt.
Other factors playing into the assessment of mineral values include a particular well’s start rate and the rate of decline in production upon the well.
According to figures provided by Hitt in Monday’s Commissioners Court meeting, Gaines County possessed 4,242 oil producing wells in 2015, which was an increase of 1.2-percent from the 2014 assessment.
Gaines County’s wells, however, have shown an average decline of 2-percent annually over the past several, per the report.
On average, Gaines County’s various entities saw an 31-percent decline in taxable valuations for the 2016 tax year, with Loop ISD seeing a 40.92-percent decline in values between the 2015 and 2016 tax years.
The City of Seagraves, according to GCAD figures, was the lone governmental taxing entity with an increase in taxable values for 2016, reflected by a 4.5-percent increase.
“It’s not great news (to hear),” said Jay Lashaway, Chief Operations Officer for the Seminole Independent School District in a report to members of the SISD Board of Trustees this past Monday evening.
Lashaway conveyed to members of the SISD Board that district officials — while planning for another decline in mineral values — were anticipating a little break in the district’s valuation based on an “optimistic” projection earlier this spring.
“We were expecting a little breathing room between what we were basing our (FY 2016-17) budget on and what our certified estimates were (from the GCAD),” said Lashaway. “Unfortunately, we didn’t get that.”
In late June, SISD Board Trustees adopted a balanced $46.8 million budget to fund their 2016-17 fiscal year, which began on July 1, based off a projected $2.8 billion mineral/property tax valuation base.
According to figures released earlier this week from the GCAD, Seminole ISD’s certified value for the 2016 tax cycle was set at $2.52 billion, roughly $300 million less than estimated by both SISD and the GCAD.
Seminole ISD’s 2016 certified value, according to GCAD figures, is a 31.59-percent decline from their 2015 certified taxable value of $3.69 billion.
“There won’t be much wiggle room with the budget this year, but we will be able to make it through,” said Lashaway.
Valuing Real Property
According to the Texas Comptroller’s website — www.window.state.tx.us — each county’s appraisal district determines the value of all taxable property within the county. Before the appraisals begin, the district compiles a list of taxable property. The listing for each property contains a description and the name and address of the owner.
The appraised home value for a homeowner who qualifies his or her homestead for exemptions in the preceding and current year may not increase more than 10 percent per year.
Property Tax Code Section 23.23(a) sets a limit on the appraised value of a residence homestead, stating that its appraised value for a tax year may not exceed the lesser of: (1) the market value of the property; or (2) the sum of: (A) 10 percent of the appraised value of the property for last year; (B) the appraised value of the property for last year; and (C) the market value of all new improvements to the property, excluding a replacement structure for one that was rendered uninhabitable or unusable by a casualty or by mold or water damage. The appraisal limitation first applies in the year after the homeowner qualifies for the homestead exemption.
How is your property valued?
The appraisal district must repeat its appraisal process for property at least once every three years.
To save time and money, the appraisal district uses mass appraisal to appraise large numbers of properties.
In a mass appraisal, the district first collects detailed descriptions of each taxable property in the district. It then classifies properties according to a variety of factors, such as size, use and construction type. Using data from recent property sales, the district appraises the value of typical properties in each class. Taking into account differences such as age or location, the district uses “typical” property values to appraise all the properties in each class.
The appraisal district may use three common methods to value property: the market, income and cost approaches.
The market approach is most often used and simply asks, “What are properties similar to this property selling for?” The value of your home is an estimate of the price your home would sell for on Jan. 1. The appraisal district compares your home to similar homes that have sold recently and determines your home’s value.
Other methods are used to appraise types of properties that don’t often sell, such as utility companies and oil leases. The income approach asks, “What would an investor pay in anticipation of future income from the property?” The cost approach asks, “How much would it cost to replace the property with one of equal utility?”
Who Can Tax and How is it Used?
More than 3,900 local governments in Texas — school districts, cities, counties and various special districts — collect and spend these taxes.
Several types of local governments may tax your property. Texas counties and local school districts tax all nonexempt property within their jurisdictions. You also may pay property taxes to a city and to special districts such as hospital, junior college or water districts.
The governing body of each of these local governments determines the amount of property taxes it wants to raise and sets its own tax rate. Most, but not all, local governments other than counties contract with their county’s tax assessor-collector to collect the tax on their behalf.
The local property tax is the largest single funding source for community services. State government receives no benefit from these local taxes.
Local property taxes help to pay for your public schools, city streets, county roads, police departments, fire protection and many other vital programs.