Are your property taxes too high? Are they not only high, but growing fast too? Shouldn’t there be some sort of protection against being taxed out of your home?
Those are just some of the questions raised by the Texas Senate’s Select Committee on Property Tax Reform & Relief in a series of recent interim hearings held all across the state. While the committee normally calls Austin home, it has taken to the road over the last six months to get a ground-floor view of the state’s property tax problem.
And what a huge problem it is.
Texas has the 14th worst property tax system in the U.S., according to the Tax Foundation’s latest national rankings. In 2012, local governments collected almost $1,600 in property tax revenue from every man, woman, and child in the state—and that insatiable appetite shows no signs of slowing.
From 2000 to 2013, Texans’ local property tax bills grew at breakneck speed, soaring by more than 101 percent. Compare that to traditional economic measures like population and inflation which rose just 70 percent, and it’s fairly obvious that taxes are growing faster than they ought to.
Over a much longer timeframe, figures from the Texas Comptroller, the state’s chief financial officer, depict a relentless growth in the tax. From 1994 to 2013, the average annual increase in property tax levies for all local governments in Texas was 5.8 percent. In other words, the average local government — all 4,100 cities, counties, school districts, and special districts—received a 6 percent pay raise every year for the last 20 years, without pause. How many private sector workers can claim the same, especially in today’s economy?
The data paints a clear picture: Texas’ property tax system is broken. And a long-lasting fix is needed now more than ever.
One possibility—which has garnered a great deal of praise in conservative circles, and won favor among many members of the Committee—involves setting a firm-but-reasonable limit on how quickly property tax revenues can grow from one year to the next. Such a limit could be set to mirror changes in population growth and inflation or a fixed percentage, say 4 percent annually. By establishing a ceiling on revenue growth, as opposed to appraisals or tax rates, many of the current shell-games could be done away with while still checking painful increases in already swollen tax bills and providing for some degree of certainty.
In the event that local officials claim it necessary to grow revenues beyond the limit, an election would be required to validate their decision. Revenue growth in excess of the limit would trigger an automatic election, providing an opportunity for officials to make their case publicly on the need for bigger government. Win the election, win the right for more tax revenue.
Structural reforms like this are crucial to restraining the growth of local governments. Without these kinds of changes to the status quo, it will be impossible to protect taxpayers and preserve the low tax, limited government model that has transformed Texas into America’s economic engine.
Fortunately, the winds of change are blowing in the direction of smaller, more accountable government. Evidence of that is on full display at every jam-packed committee hearing. All that’s needed now is for conservatives to harness that momentum and put it to work in the next legislative session to give Texans what they so desperately yearn for: clear and long-lasting property tax reform.
Quintero leads the Think Local Liberty project at the Texas Public Policy Foundation. He may be reached at [email protected]