An outside audit contracted after a valuation error led to a $10 million budget shortfall in the City of Pearland found there was no “intentional deception” in the process.
“It was more of a communication breakdown,” consultant Rodney Rhoades told council members during a report May 22.
City Council in February hired the firm Strategic Government Resources to examine the city’s overall tax calculation process and make recommendations.
The valuation error occurred in August with Harris County properties that are within the city. After being built into the city’s budget, the error and resulting $10 million shortfall was uncovered in November.
The error was attributed to incorrect tax calculations included in a Harris County Appraisal District worksheet that was ultimately used to create the city’s budget and tax rate.
The assessment did not find any wrongdoing on the part of Pearland’s city staff.
“I would stay your staff did a very nice job of reaching out and getting clarification,” Rhoades said. “Some of the best practices recommendations address how in the future staff can be better prepared for that, but in general staff did a great job of asking questions to the best of their ability, and the answers they received from the tax assessor’s office was that they had looked at the numbers and double-checked the numbers and everything looked appropriate.”
Councilman Alex Kamkar said he had read the email correspondence and offered a different view.
“Those inquiries were one sentence inquiries. I wouldn’t characterize that as thorough,” he said.
According to the Brazoria County Tax Assessor, no comparison was made between certified estimates from July 2022 and the certified tax roll uploaded Aug. 31, 2022.
“Further, during this audit, the Brazoria Tax Assessor stated it was not their responsibility to compared certified estimates to final certified rolls,” SGR states in its presentation to council.
“It’s drastically different, and that should have spurred some questions,” Rhoades said. “The City of Pearland had relied on the Brazoria County Tax Assessor for 22 years. The reliance on their communication is really where the communication breakdown occurred between the tax assessor’s office and city staff.”
Recommendations included staff training on tax rate calculations, monthly communications and monitoring of communication with all three county appraisal districts involved and contracting with a company to do calculations to help ensure accuracy of numbers.
