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Analysis: High property taxes start in Austin, not in school districts

State lawmakers complain that local property taxes need to be leashed. But state lawmakers are more responsible for the increases than they let on.

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Texas property taxes are high, and school taxes are highest of them all. Before you blame your school district, look at how state lawmakers set things up.

The state of Texas might well spend less on public education in the next budget than in the current one thanks to increasing local school property taxes.

School financing works like a waterbed: Push down on one side and the other side rises. Raise the local share of spending and the state doesn’t have to spend as much.

In Texas, property values are up. With them, revenue from property taxes is rising. For a given level of state spending, that means the locals are paying more and the state doesn’t have to spend as much.

That means, in turn, that state lawmakers don’t have to sweat rising costs like the locals do. And it frees some of those state lawmakers to holler at the locals for rising taxes even as those higher local revenues help the state skate through a tough budget.

The Texas Education Agency’s proposed budget for the next two years (the state’s two-year budget starts on Sept. 1 of every odd-numbered year) would require $34.14 billion in general revenue. That’s the state’s share of the cost of public education, and it’s $3.35 billion less than the state is spending in the current budget.

It’s also welcome arithmetic to a state Legislature that has been watching oil and gas prices, retail sales and other diminishing economic activity that feeds the Texas treasury. Comptroller Glenn Hegar has been telling the state’s budgeteers that the budget they’ll be writing next year will be tighter than the one they wrote in 2015.

The state has done a pretty good job of holding the line on its own education spending, effectively pushing increasing expenses off on local school districts that get their money from property taxes.

According to the Legislative Budget Board, state aid for education rose to $19.59 billion for this fiscal year from $18.24 billion in 2008. That’s an increase of 7.4 percent. But local revenue — generated by property taxes — rose to $26.25 billion this fiscal year from $18.2 billion in 2008, an increase of 44.2 percent.

Ten years ago, the state and local share of the cost of public education in Texas was virtually even — around 44.8 percent each. Federal money accounted for 10.3 percent. Now the locals pay 51.5 percent of the total, the state pays 38.4 percent and the federal government covers the remaining 10 percent, according to the LBB’s 2016-17 Fiscal Size-Up.

In Texas, property values are up. With them, revenue from property taxes is rising. For a given level of state spending, that means the locals are paying more and the state doesn’t have to spend as much.

Rising costs have fallen disproportionately on local districts over the past 10 years. Local property tax bills have risen accordingly, and now state lawmakers are stirred up, promising to somehow get a leash on behalf of those taxpayers.

Here’s another funny statistic from that same LBB report. The number of students attending Texas public schools on the average day has risen 16.8 percent over the past decade, to over 5 million. In 2008, each kid cost the locals $4,219 per year. The state’s cost was $4,226. The feds paid $970, for a grand total of $9,415.

The grand total is now $10,111 — up $696 from 2008. The feds pay $1,015. The locals pay $5,209 — almost $1,000 more per student than they were paying a year ago. And the state? It pays $3,887 per student, or $339 less than it was paying 10 years ago.

Some of that shift in cost can be attributed to rising property values during a prosperous time in the state’s economic history. When more money comes in from local school property taxes, the state gets a break and doesn’t have to pay as much to keep the schoolrooms open. Some, like former state Rep. Kent Grusendorf, who works on education policy at the conservative Texas Public Policy Foundation, think the local tax is functionally identical to a state property tax — one that is effectively controlled by the state of Texas.

It’s a complex and lumbering system, but some things — like where higher property taxes come from — are easy to figure out. State lawmakers are increasingly reliant on locally raised taxes to pay for education — and property owners shoulder that burden.

Blaming school districts for raising taxes is in fashion in state politics. It addresses the pain many voters are feeling, and it is certainly true that Texas property taxes are high — the sixth-highest in the country, according to the Washington, D.C.-based Tax Foundation.

Blame the folks in charge of the system. The school districts didn’t make public education dependent on property taxes — legislators did.

More columns from Ross Ramsey:

  • State officials would like to lower local school property taxes, but they've got a secret: Some of those local school tax revenues make it easier to balance a tight state budget.
  • The Clinton campaign is buying television ads in Texas, but not enough of them to capture the attention of most TV viewers — or most voters. So what's the deal?
  • Texas Democrats have pined for years for a candidate who could turn their luck around. Now they're hoping a Republican will answer their prayers.

Disclosure: The Texas Public Policy Foundation have been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

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