Months after warning school districts that it could be illegal to reduce or repeal their local optional homestead exemptions, Attorney General Ken Paxton swiftly intervened in a citizen lawsuit filed Thursday challenging the practice.
More than 20 school districts have tweaked their exemptions since Texas lawmakers last year increased a separate state homestead exemption, angering the Republican leaders who championed the property tax cut.
“It is a clear sleight-of-hand reduction in the local option homestead exemption by a handful of school districts,” Paxton, a former Republican state lawmaker, said in a statement. “This is an attempted money-grab, pure and simple. These districts clearly intend to undermine state law and negate the tax break."
Lawmakers spent weeks last spring arguing about how best to slash levies. Texas House and Senate leaders ultimately announced a deal with much fanfare to reduce property taxes by increasing the state’s homestead exemption to $25,000.
They said it would bring much-needed relief to taxpayers across the state — almost $130 per year on average last year, according to the Legislative Budget Board.
The savings means Texas lawmakers will have to budget $600 million every year to cover the loss of revenue to school districts. (That’s in addition to $8.4 billion already in the state budget to make up for three previous property tax relief measures implemented since 1997.)
Months later, they were incensed to learn that some 21 school districts had reduced or eliminated their local optional homestead exemptions.
State Sen. Jane Nelson, R-Flower Mound, chairwoman of the powerful tax-writing Senate Finance Committee, requested a nonbinding legal opinion from Paxton on the practice. In his March opinion, he said that a court would probably not allow school districts to cut the local exemptions.
On Thursday, he and other Republicans swiftly lauded a lawsuit filed the same day in rural Carson County by a Panhandle citizen, Kelly Martin.
A spokeswoman for Paxton’s office said the office did not know the plaintiff despite intervening so soon after the lawsuit was filed. She did not immediately respond to a question about how the office learned of the suit.
In the lawsuit filed Thursday, Martin, a property owner in the Panhandle city of White Deer, claimed the local school district refused to certify its local option homestead exemption and illegally assessed and collected taxes that are subject to the exemption.
The lawsuit claimed the school district “acted without legal authority or failed to perform a ministerial act.”
Reached by phone Thursday, White Deer Superintendent Karl Vaughn said he wasn’t aware of the lawsuit and therefore was unable to comment on the case. Vaughn said he knew the property tax owner but "could not venture a guess" as to why she filed the lawsuit against the school district.
Sen. Paul Bettencourt, R-Houston, who championed last year's homestead exemption legislation, applauded Paxton’s intervention and called on school district trustees to “reverse their wrongheaded decision” and restore their local option homestead exemption.
“Instead of getting the promised $129 in tax relief, these taxpayers saw their potential relief wiped out by misguided local trustees’ action against the clear intent of the Legislature and the voters,” Bettencourt said in a statement Thursday.
- Paxton Plea Intervention (119.6 KB) DOWNLOAD
- Nelson AG Opinion Request (109.1 KB) DOWNLOAD
- Paxton Homestead Exemption Opinion (285.2 KB) DOWNLOAD