Texas Legislature 2019

Analysis: Need money for property tax cuts? Ask voters first

Texas legislators are filing more property tax bills — several of which would require approval from voters. Among other things, that could shift any blame for new taxes away from lawmakers.

 Illustration by Todd Wiseman

The 86th Legislature runs from Jan. 8 to May 27. From the state budget to health care to education policy — and the politics behind it all — we focus on what Texans need to know about the biennial legislative session.

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Legislative efforts to lower property taxes could end up in the hands of Texas voters — that is, if the proposals don’t die in the House or Senate.

Whether it’s a proposal to force the state to pay at least half the cost of public education or an attempt to raise the homestead exemption on school taxes to 50 percent, the Legislature alone might not be enough. Voters might have to change the Texas Constitution to get this done.

It's no certainty that the Legislature will even give tax cuts a serious run. The state’s top leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — have presented their list of priorities enough times for all of us to memorize it: school finance, property tax reform and teacher pay raises. These people are quite well trained in the art of messaging, and not one of them has been talking about tax cuts.

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But everyone else has.

Property tax legislation is a growth industry in Texas. Lawmakers, directly and indirectly, are trying to lasso a tax that the state itself does not levy. In fact, the state constitution says lawmakers cannot raise money with a tax on property.

School districts can, of course, along with counties, cities and special districts.

It’s hard enough for the state to keep those taxes from growing since it requires the Legislature, in effect, to regulate those local governments. It’s nearly impossible to actually lower the rates those governments are charging; setting a cap on local tax rates, for instance, could be interpreted as setting a rate for those taxes. Setting a rate would be tantamount to levying a property tax, and that’s unconstitutional.

Even so, it turns out that unhappy taxpayers are willing to yell at politicians at every level about their unhappiness. And legislators, like the rest of those politicians, want to make those taxpayers/voters happy.

So here we are.

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There’s the Drew Springer legislation, not yet filed, that would get rid of some popular — and some obscure — exemptions to sales taxes, raising more than $6 billion a year to pay for bigger property tax homestead exemptions, lower business property taxes and to lower rates by about a dime. If he manages to move that proposal through, it will require a constitutional amendment to raise the homestead exemption on school property taxes to 50 percent. Others think his idea of adding a sales tax to gasoline taxes might need a voter OK, but Springer, a Republican state representative from Muenster, doesn’t think so.

State Rep. Charlie Geren, R-Fort Worth, has proposed a constitutional amendment that would require the state to cover at least 50 percent of the cost of public education — a proposition that would take a lot of financial pressure off of local school property taxes but that, like Springer’s idea, would require the state to spend billions of dollars it’s not spending now. The state currently covers about 36 percent of the cost of public education, according to the state’s comptroller of public accounts; bringing it up to 50 percent (assuming no dramatic cut in education spending) would cost upwards of $7 billion per year.

He’s got another idea that wouldn’t require state voter approval but would require it from local voters: allowing Texas counties to add a penny or two to their sales taxes to wipe out their property taxes. They wouldn’t be allowed to use the new sales tax to raise extra money — just make enough to cover the property tax load. And they’d have to get voters to approve a sales tax of as much as 10.25 percent, up from the current maximum of 8.25 percent. State Rep. Matt Krause, R-Fort Worth, has a similar proposal that would also apply to cities.

All of those have the disadvantage of leaving the final decision to the voters, but that’s also a political advantage: Those voters, having done the deed themselves, couldn’t pin the blame on their elected officials.

They’re all trying to skirt the biggest of all obstacles to property tax cuts: replacing the revenue with something else. Statewide cuts like those proposed so far would require the Legislature to pony up an additional $12 billion to $15 billion every two years.

That’s why the three top leaders have stayed away. And it’s why everybody else would be well advised to check with voters first.