Most Texans recognize the need for immediate and lasting property tax relief. In fact, it’s so understood that high and fast-growing property taxes are a problem that lawmakers from both political parties are working to advance various tax relief bills in the statehouse.
And yet despite the obvious need for reform, mayors from some of the largest cities in Texas gathered earlier this week to voice their opposition to statewide property tax relief efforts, proclaiming: “We know how to manage our budgets” and that “Texas cities are frugal…”
These objections, interesting though they are, do not square with the facts.
Here are just a few reasons why real and lasting property tax reform should be front-and-center for every lawmaker:
- The Lone Star State ranks as the 15th worst state in the nation for property taxes. According to the Tax Foundation’s latest national rankings, Texas’ local governments “collected approximately $1,557 per person in property taxes [in 2010], which ranks 15th highest nationally.” That figure is up from $1,393 per capita in 2008 when the Tax Foundation ranked Texas’ property tax system ranked as the 17th most burdensome in the U.S.
- Texas homeowners are getting pummeled. From 2010 to 2012, the three-year average annual property tax burden for a homeowner in Texas was $2,477. By comparison, the same three-year tax average for an OOD in the South Region was $1,411 annually while the average U.S. taxpayer paid $2,091, according to the U.S. Census Bureau’s American Community Survey.
- Texas businesses also bear a heavy burden. From 2007 to 2011, property taxes as a percentage of total business taxes grew from 38.4 percent to 44.1 percent, according to the Business Tax Advisory Committee’s report to the 83rd Legislature. And, as the report notes, “many Texas businesses [saw] property tax rates and values” increase over the period in spite of larger tax reform efforts aimed at bringing meaningful property tax relief.
Property taxes constitute the single largest state-local tax paid by Texas businesses (44 percent of total taxes).
- Property tax increases are not sustainable. From fiscal years 1992 to 2010, “local property tax levies jumped by 188 percent” whereas the Texas population only grew near 40 percent, according to the Texas Comptroller’s report Your Money and the Taxing Facts. In other words, property taxes are growing at much too fast a rate for the population to support.
What’s more, property taxes levied by city governments were the third fastest-growing among political subdivisions of the state (see chart below). Property taxes levied by cities increased by 192 percent from 1992 to 2010.
- The number of local governments able to levy property taxes is growing—and fast. According to the Texas Comptroller’s report Your Money and the Taxing Facts, the sheer number of local governments levying a property tax grew from 3,426 in 1992 to 4,017 in 2010. The rise in the number of taxing entities has been fueled by the creation of special purpose districts, which “accounted for 87 percent of the growth.”
The facts and data make clear: Texans need immediate and lasting property tax relief. And lawmakers should lead the way in delivering it.