A new property tax report is raising eyebrows—especially among Texans struggling to put food on the table.
The newly-released report, published every other year by the Texas Comptroller’s Office, confirms what most already suspect: Property taxes are big and growing fast.
In 2019, more than 4,200 local governments hit homeowners and businesses with property tax bills totaling $67.3 billion, a one-year increase of $3.5 billion or 5.5%. More than half of the burden was on account of school districts, who siphoned $36.2 billion out of the private sector. From 2014 to 2019, school taxes increased by almost $10 billion.
What’s more, the overall levy growth has been relentless. From 1998 to 2019, the average annual increase in the total property tax levy was 5.9%, meaning that the typical city, county, school district, special district enjoyed a revenue bump of almost 6% every year for the last two decades. That means local government coffers swelled year-after-year, decade-after-decade no matter the economic condition nor catastrophe.
To be fair, the 2019 Texas Legislature tempered these anti-taxpayer trends to some extent with historic new laws that provided billions in tax relief and increased voter input. Even still, local property taxes continue to strain family budgets, many of which are under assault from other crises too.
Make no mistake: Texas families need help. The data confirms this. Fortunately, today’s Texas Legislature is in a position to do something about it.
Over the next few months, state lawmakers will consider many different ideas, including some related to property tax reform and relief, before officials conclude their business in May. It’s crucial that strong taxpayer protections make it across the finish line.
One obvious place to start is to shore up last session’s signature property tax reform. Over the past year, a few bad actors sought to take advantage of the COVID-19 crisis to raise taxes to excess without voter approval. These cities and counties wrongly claimed that their interpretation of the law allowed them to increase taxes beyond 3.5% without asking the public’s permission first. New laws are needed to make it unmistakably clear that there is no disaster loophole for local governments to exploit and penalize those who acted in bad faith.
Another way to improve upon the 2019 law: Expand its requirements to include other types of local governments that were left out. Hospital districts, community colleges, and other small property taxing entities should also be required to seek voter approval for tax increases above 3.5%. The ideal system is one that applies one low universal standard to all.
Other technical changes are needed too. For instance, debt payable by property taxes should be included in the calculation of the 3.5% limit. Right now, local officials have an incentive to finance ordinary spending with certain debt instruments, like certificates of obligation, because they’re excluded from how the voter-approval tax rate is calculated. Lawmakers should remove the temptation here.
In addition to the changes above, we must also think big. Texans can’t afford for lawmakers to only tinker around the edges. Systemic changes are needed now. Serious discussion should be given to proposals like House Bills 59 and 958, which would eliminate a large portion of school district property taxes using either surplus state revenue or some other mechanism. It’s this sort of redesign of Texas’ tax system that should be our ultimate goal this session.
Taxpayers today are under siege. Despite last session’s signature property tax reform, local governments continue to assault property taxpayers, pushing many past their breaking point. More than ever, people need protection from local governments gone wild.
Over the next few months, state lawmakers have a chance to implement smart, aggressive changes that protect the most vulnerable and prioritize family budgets. They must rise to the occasion.