More than $1,300 each year—that’s how much a Texas family will save each year due to the Texas Legislature’s recent property tax relief deal.
Gov. Greg Abbott worked with House and Senate leadership, finally reaching a compromise plan that ultimately provides the largest amount of property tax relief ever. The bill, SB 2, allocates $18 billion dollars in tax relief in the form of tax compression and an increase to the homestead exemption up to $100,000.
Although this is a historic deal that will provide much needed relief to struggling Texans, there are still many ways that the Legislature can work to ensure that the tax relief delivered now will be preserved into the future. Many rightly worry that the lack of uniformity among city, county, and school district taxes often confuses and frustrates property owners, signaling that lawmakers must continue to focus on ways to make property taxation more consistent and evenly applied, so that the gains achieved during this special session might be better protected.
Here are a few ideas on how to improve the current system.
First, policymakers should shore up 2019’s historic tax reform to better control city, county, and special district excesses. One way to do so is to lower the voter-approval tax rate (VATR) limit, which is the maximum threshold before local officials must get voter permission (it used to be called the rollback rate), from 3.5% to 2.5% or something even less—and taxing unit types, regardless of population size. Right now, some jurisdictions get to operate under a different set of rules because of their size; but this two-tiered system creates all sorts of complication and confusion. Policymakers should make this simple adjustment to ensure that local governments are held accountable to the people when increases in taxation are required.
Another way to solidify tax relief is to make the VATR limit apply to all local government types. Under current law, the 3.5% property tax revenue limit does not apply to certain governmental entities, like community colleges, hospital districts, and other smaller taxing entities, which are allowed to operate under a higher limit. This leads to inequitable tax treatment and adds another layer of complexity to an already difficult system. To remedy this issue, the Legislature should apply the same standard to all taxing unit types.
In addition, bond elections should be made uniform across the state. Election data indicates that there is greater turnout during our yearly November elections. The Election Code states that bond elections can be either held in May or November, but given the nature of low turnout in May elections, the Legislature should require that bond elections be held in November so that the greatest number of people are represented when voting to take on new debt. This also prevents small interest groups from taking advantage of low voter turnout and swaying the outcomes of local elections.
These recommendations are designed not only to provide uniformity to the taxation process but also to ensure that voters are better informed and are able to approach a process that is often a complicated and confusing mess. Alongside the historic tax relief approved by the Legislature, these reforms will provide individuals with help and understanding of the state’s notoriously complex and costly property tax system.