Property tax cuts pledged
Abbott, O’Rourke offer opposing plans to give Texans relief
After a decade of skyrocketing property taxes in much of Texas, both Gov. Greg Abbott and Democrat Beto O’Rourke are making big promises to cut tax bills if they win in November.
Abbott said he’s going to use half of next year’s projected $27 billion state surplus for property tax relief. That could mean refund checks or buying down local property taxes with state funding to reduce future tax bills.
“Because this is your money, I want to return at least half of that money to you with the largest property tax cut ever in the history of Texas,” Abbott told a couple of hundred supporters during a speech in Collin County in the Dallas suburbs earlier this month.
But O’Rourke said during a speech in Del Rio just days later that the property tax increases
over the past seven years are rooted in bad budget decisions on schools and health care made by Abbott and Republicans in the Legislature. He said they are responsible for higher property taxes in part because they have shortchanged public education by not putting enough state money into schools, which levy the bulk of the property taxes in Texas.
That has left school districts having to raise property taxes to fund operations and growing expenses such as teacher pay increases, O'Rourke said.
“When I'm governor, the state government will pay what it owes our families in school funding, meaning lower property taxes for all of us,” O'Rourke said.
The former El Paso congressman said he also would push to expand Medicaid, which would help pay for the cost of people without insurance who show up to emergency rooms for care. Now, counties and hospital districts pass those costs on to property tax payers in the form of higher rates.
He has also said legalizing and taxing marijuana and allowing an expansion of casino gambling in Texas could generate revenue for the state to lower the pressure on property taxes.
The promises are all coming with less than 30 days until the start of inperson early voting on Oct. 24. Election Day is Nov. 8.
Voters have heard promises of tax cuts before. For decades, state officials have promised property tax cuts, but have come up short, with measures that provide some relief but not enough to offset the yearly increases homeowners see on their bills.
Meanwhile, the state's red-hot real estate market keeps pushing home values up, and local agencies trying to cope with the state's population boom keep raising their property tax collections.
Dale Craymer, president of the Texas Taxpayers and Research Association based in Austin, said the state just doesn't have the kind of influence over local property taxes to ensure changes in the system will result in lower tax bills. He compared it to a football game.
“The state is not the player on the field,” he said. “The state is the referee. It's the players that determine the scores.”
The players in this case are local governments that set tax rates.
Data from Craymer's group shows the difficulty homeowners and business owners have faced in Texas. In 2011, statewide Texans paid just over $40 billion in property taxes. By 2015, that grew to over $50 billion and in 2021 it hit a record $73 billion.
In 2019, Abbott signed a pair of measures that are supposed to cut school property taxes and also rein in city and county taxes.
House Bill 3 essentially limits school tax growth to 2.5 percent, while Senate Bill 2 required cities and counties to limit overall tax growth to 3.5 percent unless they put it to a vote of the people. The state has also increased the size of the homestead exemptions for homeowners, adding another layer of protection from higher tax bills.
Craymer said that while all of the state's efforts to cut property taxes have provided significant relief, it doesn't mean everyone is going to see some big tax cut compared to last year's bill.
Without the 2019 legislation, Craymer said property tax collections could have been another $6 billion to $7 billion higher.
But the 2019 tax relief that doesn't help renters much. Non-homesteaded properties and commercial rental units are seeing property tax increases climb even higher than homestead properties. That expense is often passed on through higher rents.
Taxes, and blame
Abbott, 64, was first elected governor in 2014 and before that was the Texas attorney general from 2012 to 2014. When asked about property tax increases of 30 to 40 percent in some areas of Texas since he took office, he blames local government.
“The state of Texas doesn't have the authority to levy property taxes,” Abbott said in an interview in Midland. “It's because local governments have been increasing tax rates.”
But he said it is important for people to remember that the increase in property taxes ultimately means Texans are seeing the values of their homes climb because the state is such a desirable place to live. He called it the “largest form of wealth generation in the history of our state,” since he took office.
In past decades, home values stayed relatively flat in Texas with modest gains. But in the last 10 years, the rising property values mean better returns for Texans when it comes time to sell or securing loans against the property.
Abbott, a Wichita Falls native, said he knows there is more work to do on taxes and thinks he can lower them even further if voters give him a third four-year term in office. He said there are two ways he's looking at using that budget surplus to cut taxes: Rebate checks and another buydown of local taxes, as the Legislature did in 2019.
He said a big priority will be to make sure it's not just a one-year reduction that results in higher taxes down the road to cover the cuts.
Abbott said voters shouldn't trust O'Rourke on property taxes because of his tenure when he was a City Council member in El Paso more than a decade ago. O'Rourke voted for budgets that included higher property taxes at least twice.
“He's the property tax increaser,” Abbott said. “I'm the property tax cutter.”
O'Rourke's campaign says that attack is laughable, given the increases were often tied to state mandates for local governments to raise pay and funding for police and fire services.
In 2007, one of those tax increases was required because the city manager of El Paso at the time warned the City Council that without it they would have to slash $10 million from their budget, and wouldn't have money for raises for police and firefighters.
In 2010, another tax increase was largely due to the city trying to cover a shortfall in the public safety pension fund, O'Rourke's campaign said.
O'Rourke, who turns 50 on Monday, served on the El Paso City Council from 2005 to 2011 before winning a congressional seat in 2012. He served in Congress until 2018 when he ran for the U.S. Senate.
Despite Abbott's promises, O'Rourke says there is no hiding from the fact that property tax bills just keep going up in Texas on Abbott's watch and he deserves the wrath of voters. He said that even worse, Abbott's failure to protect the electric grid has resulted in higher electricity bills for Texans as utility companies pass on the costs of the deadly 2021 winter storm on to ratepayers.
“Abbott isn't looking out for Texas families,” O'Rourke said.
O'Rourke said if he's governor, one of the first things he'll do is sign on to help Texas Reps. Charlie Geren, R-Fort Worth, and Hugh Shine, R-Temple, pass legislation to create a constitutional amendment requiring the state to always cover at least 50 percent of maintenance and operation costs for public schools.
But if he's elected, O'Rourke could be facing a bigger challenge getting measures through the Legislature, which is likely to still be run by Republican majorities.
For years, proposals to expand Medicaid or legalize marijuana have gotten zero traction in the Texas Senate.
Still, O'Rourke told voters in Del Rio that he's convinced there are Republican legislators who will help get both done. And he frequently reminds voters that when he was in Congress, Democrats were in the minority, yet he was able to get legislation signed into law by then President Donald Trump.