A Lawsuit Over Property Tax Assessments Reveals the Perils of Contracting Out Tech

Software provider Tyler Technologies has been accused of overvaluing properties in Missouri’s second-most populated country—and it’s not the first time they’ve been in the hot seat.

This summer, residents of Jackson County, Missouri began receiving surprisingly-high property tax bills. As part of the county’s biannual reassessments, some residents saw their taxes go up by as much as 83 percent; one homeowner saw the value of her mobile home increase nearly 400 percent from $40,000—overvalued by $10,000 in 2021—to its current revaluation set at $202,000. This, county officials have claimed, is the result of contracting out their property assessment process to an external contractor, Tyler Technologies, a Plano, Texas-based public sector software provider.

In a $17.9 million contract signed in January of this year, Tyler Technologies agreed to provide the county with a full reappraisal process and data management services over the next two years. But the process has been marred by issues. According to local news outlet KSHB, parcel data was returned late; Tyler also agreed to manage property owner appeals of their reassessments, but their phone system didn’t work properly and was set to Eastern (not Central) time, and employees also failed to arrive on appeal calls over Zoom.

Attorney Ken McClain has filed a class-action lawsuit against Tyler and the county on June 20, "in response to the property tax assessment, arguing the county did not properly notify property owners in a timely manner," reports KCUR, Kansas City’s NPR affiliate. But this is only one of several instances in which Tyler has been accused of poorly executing municipal contracts. Data transition issues abounded in a contract with Lubbock County, Texas, which resulted in difficulty obtaining legal discovery and records, and the Lubbock, Alamedia County, California, and Shelby, Tennessee counties wrongfully jailed individuals after switching to Tyler software products. These, and myriad other issues, have reportedly extended over multiple years, adding taxpayer costs to existing multi-million dollar contracts. (These ongoing problems haven’t stopped the state from deepening their relationships to Tyler Technologies—in late June, the city of Branson contracted with Tyler for comprehensive financial management, human resources, utility billing, and other services; in July, Missouri State Highway Patrol signed an agreement with Tyler for computer-aided dispatch services and public safety analytics.)

These debacles highlight the challenges of private software procurement processes in the public sector. In a recent interview for The Ezra Klein Show, Jennifer Pahlka, former deputy chief technology officer for former president Barack Obama and author of the new book, Recoding America, describes the gaps between policy and technological implementation.

"Because the distinction between something that is inherently governmental, like a government person must make this decision — i.e. most policy decisions — and something that is inherently commercial is like, OK, well, we’ll make the policy decision and then we’ll contract it out to somebody who just delivers on it," she said. "And it creates this real separation between policy and implementation, which has a lot of complications to it. And I think over time has snowballed into some really bad outcomes, because we’re trying to do policy over here, implementation over here…and so much gets lost in the middle."

While much of the procurement problem is complex, even at the local level, bidding on such contracts requires, "very little evidence of actual competency that are required in this paperwork. It’s all evidence of compliance. And so it’s very easy to find something that’s not compliant. But the result is easily six months, often year or two, delays in getting something done," she continued.

Tyler moved to dismiss the lawsuit last week, and county administrators have told reporters at KSHB that the contract has not been breached, though $6 million remains unpaid to the company until they fulfill all deliverables. But, the Jackson County legislature chairman Darren McGhee told reporters that earlier this summer, a Tyler Technologies representative visited and told them all was well: "...That doesn’t even make sense with all the issues we’re having. It’s countywide. It makes us look bad that we’ve contracted to a company that clearly has done a bad job. We should have never [hung up] on taxpayers."

Top Photo of Kansas City, Missouri by Carolyn Van Houten/The Washington Post via Getty Image

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