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Did you catch that footnote in the early budget numbers for the state of Texas?
In the midst of all the week’s gloomy state budget news, this stuck out like a gold nugget in a cow patty: Rising property values in the state’s school districts translate into higher local tax revenue and a reduced need for state money for education.
That’s another way of saying the state will spend $3.2 billion less in the next budget than it would have — in large measure because property values are up and local taxpayers are unwittingly subsidizing the state.
That frees state officials to spend their time talking about things like limiting local school districts’ ability to collect more taxes.
Feel like everyone is giving you the straight scoop on this? It’s not that everybody in state government is lying, it’s that it’s hard to change one thing in school finance without wrecking something else.
Public schools in Texas will get 51.5 percent of their money from local property taxes in 2017, according to the Legislative Budget Board. They’ll get 38.4 percent from the state and the rest from the federal government. The local/state part of that equation works like a waterbed: When one side goes up, the other side goes down.
When property values rise, local tax revenue tends to rise with it. That eases the need for more money from the state for public education. When the state budget is tight — it’s tight now —that’s one big-ticket item the Legislature’s budget writers can cross off their lists.
Education remains, alongside health and human services, the biggest item in the state budget. But this keeps the lid on increases — it’s $3.2 billion that lawmakers won’t have to spend on education in the next budget.
That couldn’t come at a better time for the state’s budget writers. Comptroller Glenn Hegar told lawmakers this week that they’ll have less money to spend in the next budget than they had for the current one.
The state’s economic growth last year, expected to be 3.0 percent, turned out to be just 0.2 percent. Hegar has downgraded his original forecast of 4.1 percent growth for this fiscal year to 2.5 percent.
Texas lawmakers are starting their session with $1.5 billion left in their accounts, but they expect to need at least that much and probably more just to cover some unanticipated costs in the current budget cycle that ends in August.
They’ll be looking for places to save money, for programs and services that can be cut without too much harm and for sources of money — from the state’s $11.9 billion Rainy Day Fund to accounting tricks to favorable changes in federal spending — to make up what some say is a $5 billion to $6 billion shortfall.
Further squeezing budget writers' options: Lawmakers, with the agreement of voters, dedicated up to $5 billion in sales taxes to transportation in 2015, taking a big bite out of what would have been available for general spending.
Had property values around the state remained flat, your property tax bill might be the same next year — but the state would be on the hook for $3.2 billion more for public schools or to cut education spending.
Instead, local property taxpayers will cover that part of the shortfall, or about a third of what might have been without a continuing rise in real estate values.
Your own legislators probably agree that you’re getting thumped on local property taxes — especially school taxes. The Tax Foundation, a nonprofit that keeps track of such things, says Texas has the sixth-highest property taxes in the United States (and 39th in combined state and local taxes paid per capita).
They probably agree that your tax bill has been climbing too quickly — the subject of legislative hearings and reports during the time between this session and the last one.
They might be less willing to admit that rising property values are making a tight budget year a little easier to handle. They might not even be aware of it.
Surely, they’d thank you for the help if they knew.
More columns from Ross Ramsey:
- House Speaker Joe Straus won a fifth term in that post on the first day of the legislative session. And unlike his predecessors, he's more secure politically now than when he started in 2009.
- The so-called "bathroom bill" unveiled by Republican leaders last week is the latest piece of legislation that would overwrite local laws with state regulations cooked up in Austin.
- The Legislature goes to Austin on Tuesday, but lawmakers will find out a day before that what kind of budget they're going to write. Spoiler alert: Money is tight.