Changes to prop­erty tax sys­tem good pre­cur­sor to big­ger re­form

Austin American-Statesman - - VIEWPOINTS -

Gov. Greg Ab­bott’s sup­ple­men­tal call for a spe­cial ses­sion in­cludes in­struc­tion to struc­turally re­form Texas’ es­ca­lat­ing prop­erty tax bur­den.

From 2000 to 2015, prop­erty taxes levied statewide soared by 132 per­cent, out­pac­ing com­bined pop­u­la­tion growth and in­fla­tion that grew just 82 per­cent.

Crit­ics have been quick to at­tack the gov­er­nor’s push for prop­erty tax re­form, claim­ing that the problem can be solved by in­creas­ing state gov­ern­ment spend­ing on pub­lic ed­u­ca­tion. Most rea­son­able peo­ple rec­og­nize that throw­ing money at Texas’ prop­erty tax problem, re­gard­less of source, isn’t an ac­tual so­lu­tion.

The an­swer lies in struc­tural prop­erty tax re­form that em­pha­sizes ac­count­abil­ity and trans­parency, at least un­til of­fi­cials can re­place the prop­erty tax sys­tem en­tirely with a more ef­fi­cient, re­formed sales tax.

It’s only by chang­ing the na­ture of the sys­tem, both in­cre­men­tally and in rad­i­cal fash­ion, that Tex­ans will find real re­lief. That’s some­thing that can’t hap­pen soon enough, con­sid­er­ing some of the re­cent trends.

Ex­ces­sive prop­erty tax levy in­creases have been par­tially fu­eled by the mam­moth num­ber of prop­erty tax­ing ju­ris­dic­tions here in Texas. To­day, more than 4,100 lo­cal gov­ern­ments that levy a prop­erty tax col­lect more than $52 bil­lion from home­own­ers and busi­nesses statewide. That trans­lates into a bur­den of roughly $1,900 per Texan or about $8,000 for a fam­ily of four.

While it’s true that most of this bur­den — 54 per­cent — can be traced to school districts, it’s a mis­take to think that pour­ing even more state tax dol­lars into pub­lic ed­u­ca­tion will solve the problem.

Al­ready, the state spends roughly 40 per­cent of the funds it has dis­cre­tion over on pub­lic ed­u­ca­tion. An in­crease would shift the al­ready-ex­ces­sive gov­ern­ment bur­den from lo­cal to state. It could ex­ac­er­bate the problem by giv­ing school districts breath­ing room to raise taxes even higher to pay for wish-list items, like mul­ti­mil­lion-dol­lar foot­ball sta­di­ums.

Let’s be clear: School district prop­erty taxes are a big part of your prop­erty tax bill — but they aren’t the only part, nor are they the fastest-grow­ing por­tion.

From 2005 to 2015, to­tal prop­erty taxes levied statewide in­creased by 4.9 per­cent on an av­er­age an­nu­ally. Sep­a­rat­ing levies into ma­jor cat­e­gories of prop­erty taxes, av­er­age an­nual growth in­creases were: 7 per­cent by spe­cial pur­pose districts, 6.3 per­cent by coun­ties, 5.6 per­cent by cities and 4 per­cent by school districts.

Clearly, there is room for re­form across the board.

Two bills dis­cussed dur­ing the reg­u­lar ses­sion would have pro­vided long-term prop­erty tax re­lief. Se­nate Bill 2 would have set the au­to­matic roll­back elec­tion to 4 per­cent for cities, coun­ties, and spe­cial pur­pose districts — those that had the largest growth rates dur­ing the last decade. Se­nate Bill 669 would have en­hanced prop­erty tax trans­parency.

The re­forms en­com­passed in these bills should be the tar­get for law­mak­ers in the spe­cial ses­sion. Over the long-term, law­mak­ers should be think­ing about how to achieve the ultimate pros­per­ity-gen­er­at­ing re­form: the elim­i­na­tion of prop­erty taxes en­tirely.

In tan­dem, these re­forms will not only be good for tax­pay­ers, but also great for the eco­nomic health and pros­per­ity of Texas.


Mem­bers of the Se­nate Se­lect Com­mit­tee on Gov­ern­ment Re­form dis­cuss prop­erty tax re­lief at the Capi­tol on July 22.

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