A new property tax report raises eyebrows – especially among Texans struggling to put groceries on the table. The report, published every two years by the Texas Comptroller’s office, confirms what most already suspect: property taxes are high and growing rapidly.
In 2019, more than 4,200 local governments hit homeowners and businesses with $ 67.3 billion in property tax bills, a year-on-year increase of $ 3.5 billion, or 5.5 percent. More than half of the exposure came from school districts, which raised $ 36.2 billion from the private sector. From 2014 to 2019, school taxes rose by nearly $ 10 billion.
In addition, the overall growth of the levy was relentless. From 1998 to 2019, the average annual increase in total property tax was 5.9 percent. That means that local government coffers grew year after year, decade after decade, regardless of the economic situation or disaster.
2019 Texan legislation mitigated these anti-taxpayer trends to some extent with historic new laws that allowed billions in tax breaks and increased voter input. Even so, local property taxes continue to weigh on family budgets.
Texas families need help. Fortunately, today’s legislation is able to do something about it.
Over the next few months, lawmakers will consider many ideas, including some related to property tax reform. Strong taxpayer protection must make it across the finish line.
One starting point is the support for the property tax reform signed at the last meeting. Over the past year, some bad actors – 38 local tax courts including Houston – tried to take advantage of the COVID-19 crisis to inflate taxes without voter approval. These cities and counties falsely claimed that their interpretation of the law allowed them to increase taxes above 3.5 percent without soliciting public permission. New laws are needed to make it abundantly clear that there is no disaster loophole for local governments to exploit and punish those who have acted in bad faith.
Another way to improve the 2019 law: expand its requirements to include other types of local government that have been left out. Hospital districts, community colleges, and other small property tax authorities should also be asked to seek voter approval for tax increases above 3.5 percent. The ideal system applies a low universal standard to all.
Further technical changes are also required. For example, a debt payable through property taxes should be included in the calculation of the 3.5 percent limit. Currently, local officials have an incentive to fund normal expenses with certain debt instruments, such as letters of commitment, as they are excluded from calculating the tax rate for voter approval. The legislature should remove the temptation here.
Proposals such as House Bills 59 and 958 should be seriously considered, which would remove a large portion of the school district’s property taxes either through excess government revenue or some other mechanism. It is this type of tax reshuffle in Texas that should be our primary goal in this session.
Despite the property tax reform signed at the last session, local governments continue to attack property taxpayers, pushing many past their breaking point. More than ever, people need protection from local governments that have gone wild.
Over the next few months, state lawmakers will have the opportunity to make smart, aggressive changes that will protect the most vulnerable and prioritize family budgets. You can’t miss the moment.
James Quintero is the political director of the Texas Public Policy Foundation’s Government for the People campaign. Anthony Poalillo is a research fellow at the Texas Public Policy Foundation.