Hold Republicans to their much-promised property tax relief
The election is over, it’s time to start governing, and the first item on the agenda is property taxes, how to reduce them for homeowners and how not to give them away to big business.
Republican politicians made a lot of pledges on the campaign trail. Now that they control every statewide office and the Texas Legislature, they owe us the tax relief and a brighter economic future they promised.
High inflation will give Texas lawmakers at least $27 billion in unexpected revenue to spend when they meet next year, Comptroller Glenn Hegar reported. Higher prices generate higher sales tax revenues, and the oil and gas industry’s success — thanks to global chaos — means higher severance tax revenue.
Gov. Greg Abbott said he would use half the windfall for property tax relief. But making promises is easier than keeping them.
The state does not impose property taxes; local authorities levy them. And even when local authorities maintain the same property tax rates, tax bills go up in tandem with higher property values. State officials have little control over either locally elected officials or property values.
Abbott and his allies could mail out refund checks or buy down local property taxes with state cash. For example, the state can contribute more to public schools so districts can lower tax rates. But both solutions are one-offs and do not per
manently lower taxes.
Past GOP efforts to reduce property taxes have rarely reduced bills by more than a few percentage points. If Abbott manages to pass $13 billion in property tax relief over the next two years, that will represent, at best, an 8.5 percent onetime decrease based on 2021 tax bills of $73 billion.
If property values rise 8.5 percent, then it’s a wash. Also, the tax relief will go away when that revenue surplus goes away.
Meanwhile, GOP leaders want to bring back property tax breaks for corporations, previously known as Chapter 313 incentives, after their place in the tax code.
For 20 years, Chapter 313 allowed local school boards to grant tax breaks to attract commercial investment. After approval by the comptroller, the state would then reimburse the school district for the lost revenue. Then the corporation would kick in a little extra cash for schools.
In 2020, local officials approved $10.8 billion in tax breaks.
An investigation by my colleagues Eric Dexheimer and Mike Morris found a poorly administered program that rarely produced the jobs promised or the objectives stated. Conservative and liberal lawmakers teamed up to kill the program in 2023.
Like a movie monster, though, Chapter 313 is springing back to life.
“We have to take a long, hard look at how we’re gonna re-establish the Chapter 313 tax agreements,” Texas House Speaker Dade Phelan said in August, quoted by the Texas Tribune. “We’re gonna have a version of 313s that are more transparent, with more accountability, more oversight. I firmly believe we can get that done.”
Expect a massive fight over whether to include some industries. Lawmakers backed by fossil fuel interests want to exclude renewable energy projects. Others want to give existing businesses a bite at the apple to help keep them going.
Dick Lavine, a senior policy analyst for the left-leaning think tank Every Texan, who helped kill Chapter 313, urged lawmakers at a recent hearing to at least negotiate a little harder before giving away billions.
“What we really need is a much better analysis — not just ‘I might move to Singapore,’ ” Lavine advised. “Let’s see what else is on the table. Maybe a gap analysis and a location comparison, their startup and operating costs, their taxes and what other incentives they’re getting.”
Politicians, even conservative Republicans, tend to spend like drunken sailors when the treasury is full. The more significant challenge is convincing them to leverage the good times to prepare for the bad.
The Russian invasion of Ukraine and OPEC’s desire to profit from it are why oil and natural gas prices are high. But a global recession could suppress prices, and international efforts to sell only new electric vehicles by 2035 means many drillers are reluctant to invest in big new oil wells.
Natural gas will remain profitable for at least two more decades, but Texas needs to rely less on fossil fuels for its economic future. Will lawmakers invest in new sources of energy and additional universities? Will they begin preparing for a warmer climate with potentially less water?
Probably not. But we should demand our share of the $27 billion surplus and make big business earn their tax breaks. After all, it’s what Republicans promised all Texans.