We have found that, although the freeze adjusted value is good in helping you estimate collections, the net taxable value (not the freeze adjusted) comes closer to your T2 value.
You do not yet have a T2 value from the comptroller's property value study (PVS) for 2019. We have seen some folks try to use the freeze adjusted property value from their CAD as their 2019 T2 PVS value, but we do not think the freeze adjusted value is a good proxy for the T2. value. We have found that, although the freeze adjusted value is good in helping you estimate collections, the net taxable value (not the freeze adjusted) comes closer to your T2 value. Remember that using a T2 value that is too low in your template will result in overestimation of state aid. We recommend you go back a few years and look at the reports your CAD gave you and compare them to the comptroller's property value study value here (under PVS Findings) and see how close they come.
Here is a slide from one of the presentations we have been making about revenue estimation. In the district we used here, the T2 value is consistently about 92% of the Net Taxable, but it is about 15% higher than the freeze adjusted value. We have found that these relationships vary from district to district, depending on lots of things, one of which is whether the district offers an optional exemption that is not recognized in the PVS. You might want to try the same thing in your district by going back a few years to see if there is a consistent relationship between what your CAD is giving you and what eventually comes out of the PVS to help you project that value. We think tax year 2016 is a good place to start since it is after the last adjustment to the freeze for homestead exemption changes.
Another way to think about this, that might be easier for some of you, is to just apply the same year over year growth rate that you see in your local CAD value to your PVS T2 value. We did that below. The idea here is that the district might decide that, since the local net taxable is growing by 7.5% between 2018 and 2019, they can inflate their 2018 T2 value by that same 7.5% to estimate the 2019 T2 value. Of course, you will want to revisit all of this when you get your final certified value and when the 2018 T2 value is final.
If you think you may end up with state values because the property value study in past years has found that your appraisal district has been undervaluing property, you should reach out to whoever is helping you work on property value audits to see if they can offer any assistance in estimating the 2019 PTAD T2 value.
Article originally posted June 29, 2019.
