From the campaign trail to election night victory speeches to promises in the halls of the Texas Capitol, property taxes are the top priority for lawmakers. Depending on which metric you use, the state generally ranks in the top 5 nationally for having the highest property taxes. Lawmakers say they have to do something to lower those bills.
But what is that something?
The State Can't Directly Cut Property Taxes
There are a few problems with the state trying to lower property tax bills. First, there isn’t a state property tax; that’s unconstitutional. So the state can’t simply say to cities and counties: “Lower the property tax rate.” Lawmakers have to work around the edges.
Their two biggest tools are passing laws that control how quickly property tax revenues can increase and coming up with state money to replace some property tax collections.
These are the main strategies lawmakers are using this legislative session.
The State Can Slow How Quickly Your Property Tax Bill Goes Up
The Texas House and Senate have filed bills aimed at slowing the amount of property tax revenue a city or county collects. Currently, there’s an 8 percent cap on how much revenues can increase year over year – although it’s not really a cap. If Austin were to pass a budget with a 9 percent property tax revenue increase, for example, residents could try to stop it. They could collect signatures, then file a petition to hold an election to overturn the increase.
The bills proposed this year would automatically require a public vote if a municipality raises its tax revenue by more than 2.5 percent – no signature gathering or petition filling needed.
If a law is passed and a municipality doesn’t increase its tax revenues above 2.5 percent, after 10 years your property tax bill won’t be as high as it could have been without the cap.
But, it doesn’t cut taxes, it slows their increase. Again that’s not nothin’ – but it’s not a tax cut.
The State Can Help Lower Taxes By Giving Schools More Money
One way the state could help residents get lower tax bills is by investing more in public education. If the state increases how much it spends on schools, school districts would be able to lower property tax revenues, which means actually reducing property tax bills.
Texas lawmakers haven’t laid out a plan for how they want to do this and how much they want to spend. But a school finance commission has floated an $8 billion figure. The big questions that need answering here: Where does that money come from this year? And how does the state keep paying more for schools in future budgets?
Democrats and Republicans have made public school funding a priority this session. So we will eventually have a bill that answers those questions.
