A while back, I posted a thread concerning being surprised by a tax bill from a county in Texas in which I had no royalty interest holdings. Subsequent to that, I was surprised by another tax bill from another county in which I had no holdings. After research, I determined that my holdings with respect to this issue are entirely within Fisher county. Fisher county consolidated school districts with districts in Nolan and Taylor counties, resulting in tax bills from those counties in addition to Fisher county. I only received an appraisal from Fisher county.
It strikes me this is a very inefficient way to do business for all parties concerned. Instead of the county in which the wells reside following up the appraisal with a single tax bill that collects for the consolidated school district that resides in their county and then sending a single check to each of the school districts, three counties are paying the fees to send out tax bills and paying the labor to process the payments received and the royalty receivers are having to send in three separate payments. For small interest owners such as myself I suspect the costs of processing the billing and payments exceeds the revenue received.
It seems to me the state has an opportunity to greatly increase fiscal efficiency by making each county responsible for collecting all taxes appraised/assessed within their boundaries or exempting taxation of properties if the cost of processing the billing and payments (including postage) exceeds the revenue.
Usually, when I post a thread like this, by this time a couple of people will have posted responses saying or implying that I don’t have a clue what I am talking about.
Perhaps, the title didn’t catch the attention of many. Perhaps everyone who has read the post agrees.
Either way I want to elaborate a bit.
Cost of billing:
2 pages of paper - .02
envelope - .03
postage - .78
wear/tear on printer, cost of ink - .02
payroll costs ($15/hr) for removing statement from printer, folding, inserting in envelope, applying postage and moving to mail pickup - $3.75
Cost of payment processing:
labor to open mail, record payment, prepare deposit slip - $3.75
Total estimated cost of 2 page bill $8.35 (per county).
The two bills I received are for $6.08 and $6.33.
So for the 2 bills, processed by separate counties, cost is $16.70 versus revenue of $12.41.
I have no way of estimating how many other small royalty interest holders exist, but if the county where the royalty interests reside was the only one to bill and they wrote a single check to each of the other school districts for monies collected, instead of a loss of $4.39 for the additional 2 counties, almost the entire $12.41 of revenue would be a gain.
It seems to me that is a very strong argument that the current procedure is very inefficient.
Your points are taken. The simple fact is that with the government running anything, there is little incentive to improve anything, and every incentive to figure out how to maximize employment and keep the status quo. County taxing efficiency and accuracy, especially for oil and gas mineral interests is extremely poor in TX (and likely elsewhere as well). I’m afraid that until you happen across any legislators who care about efficiency and effectiveness, this will remain.
For a serious contribution to government efficiency, the best solution is for you to consolidate your small mineral ownership with others in the same tract so only one ad valorem tax bill has to be sent for the tract, instead of multiple small bills. For small school districts crossing county lines, it is most efficient to ask a single county to assess the taxes and only have to process one payment. These districts have small administrative departments and save money this way.
We have a couple of wells out of about 200 where the pooled unit crosses county lines and we receive 2 tax bills. The appraisal of the wells are by a single company, then the appraisal is prorated to the entities involved. My limited management experience is that processes are most efficient/ effective when based on the 90% , rather than the 10% exceptions to the rule. Prior to 1980 each taxing entity did their own appraisal, set their own valuation, and collected their own taxes. The legislature mandated central appraisal in the 80’s and central collections have increased greatly since then.