Changes to property tax system good precursor to bigger reform
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.