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Analysis: No, the Texas Legislature isn’t lowering your property taxes

Texas legislators would love to lower your property taxes, but none of the proposals they're considering in the special session would do that.

Construction in downtown Austin on June 20, 2017.

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Voters don’t like property taxes. State lawmakers like voters and want them to be happy. But they are not going to lower your property taxes.

As they enter the second half of their 30-day special session, Texas legislators are trying to limit increases in a tax they do not control. They might accomplish that much, but they don’t have the power to actually cut your property taxes. Only the local governments that set your property tax rates can do that.

This is a weird public policy problem, and a prickly political one. People complain because taxes are high. They complain at town hall meetings and in letters and calls to state officials, in volumes high enough to prompt official action, even from officials who aren’t directly responsible for the taxes they’re complaining about.

State lawmakers, eager to win over their angry taxpayers, can intervene in a couple of ways: by increasing what it spends on public education and thus lowering pressure on local school taxes or by trying to hobble cities and counties and other tax collectors with growth limits and reporting requirements and so on.

The second option is less satisfying to voters, but it’s cheaper.

Over the past decade, the state’s share of the cost of public education has dropped from about 45 percent, according to the Legislative Budget Board, to about 38 percent. Had legislators and budget writers kept the state’s contribution at 45 percent, local school districts across Texas — and their property taxpayers — would have spent $18.6 billion less over that decade than they actually did.

If state lawmakers had that much money in the till, they’d be able to say “our bad” and put a bandage on the boo-boo, spending more money per student and giving local property taxpayers a big, fat tax cut.

They don’t have the money. The governor has asked them to study the school finance system, an exercise that could address property tax pressures, equity among school districts, adequacy of public education and a number of other gnarly policy issues connected to public education and how we pay for it.

In the meantime, legislators are considering that second, cheaper option mentioned above — restraining local government increases in property tax increases. 

They failed in the regular session. The Senate wanted to require voter approval for any local tax increases (not including school districts) over a certain amount. The trigger rate was different in various proposals; special-session legislation approved by the Senate last week would require elections for tax hikes of 4 percent or more; a House committee change would put the trigger at 6 percent. (They've tried very hard to spin that as savings, even going to the extent of attaching an unusual "hypothetical fiscal impact" to the financial analysis of Senate Bill 1.)

A separate House bill scheduled for debate today has a lot in common with a proposal that stalled in the regular session. It doesn’t mess with the rollback rates. Some people aren’t even calling it a property tax bill, opting for “the transparency bill.” The idea is to change property tax notices to make it clear to each taxpayer what each local government is proposing to do with tax rates — the better to arm people to complain to city hall or the commissioner’s court when they think tax hikes are too high.

If state lawmakers had that much money in the till, they’d be able to say “our bad” and put a bandage on the boo-boo, spending more money per student and giving local property taxpayers a big, fat tax cut.

None of those bills would lower taxes. Each theoretically arms voters to keep local taxing and spending under tighter control. And neither of them gets to the more effective, more expensive rebalancing of the school finance system.

State officials, to take their side for a minute, have no easy way out of this box. The state already has the sixth-highest property tax burden in the country, according to the Tax Foundation. Texas has the 12th-highest sales tax. Other states can keep those taxes down, in part, because they also have personal income taxes.

Texas doesn’t have one, and is pretty proud of it. One of the most emphatic answers — ever — to a question in a University of Texas/Texas Tribune Poll was on a state personal income tax. In 2011, when the state was in a very tight financial spot, the poll aimed to see what sources of revenue might be more or less acceptable to voters. Personal income taxes were deemed the unfairest proposal of all; only 6 percent said they’d be willing to consider it.

Raising the state’s sales tax was right behind income taxes in unpopularity in that six-year-old survey; only 12 percent thought that was a good idea.

Two years ago, Texas lawmakers began dismantling the business franchise tax that was the foundation of the state’s last rebalancing of public school finance a decade ago.

The money has to come from somewhere.

Disclosure: The University of Texas at Austin has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

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Public education State government School finance Special sessions Texas Legislature