Gov. Greg Abbott and Lt. Gov. Dan Patrick have announced two opposing plans to address Texas’ property tax problem.
During an interview with CBS News Texas, Abbott said that there is already a way to fully fund education through the annual surplus.
“The way we are able to pay for it is through the budget surplus that we run year after year after year,” Abbott told CBS News. “Our annual surplus exceeds the amount that it would cost for the state to fully fund education. If we implement the cuts that I’m proposing.”
Abbott plans to provide relief to property owners by lowering the homestead appraisal cap from ten percent to three percent. In addition to property owners, the cap will extend to renters and businesses, providing relief from rising property values and tax increases.
The plan will make it so properties can only be appraised once every five years. Current Texas law allows local governments to reappraise properties every three years, though they often do so every year.
The proposal would also limit local government spending to population plus inflation or 3.5 percent, forcing them to live within their means, as most Texas residents do.
Additionally, Abbott will let voters decide if they want to pay property taxes to school districts. He proposes placing a constitutional amendment on the ballot to determine whether school district property taxes should be abolished or retained.
Abbott assured Texans that his plan would work on CBS News Texas, stating that there would be no current taxes that would have to be increased to make it work.
“When you look at our growth trajectory, we’re going to have plenty of income to make sure we’re going to be able to pay for these property tax cuts,” Abbott said.
However, while Abbott has proposed his plan, Lt. Gov. Dan Patrick, who is also up for re-election, has an opposing plan.
Patrick’s plan, ‘Operation Double Nickel,’ would lower the school district senior homestead exemption age from 65 to 55. According to the plan, this would give Texans over 55 an additional decade to decline the district’s property tax bills, saving them nearly $950 per year. It would also save Texans over 55 an estimated $16,167 per decade.
According to Texas State Sen. Paul Bettencourt, the plan would also help 6.1 million homesteads across Texas by increasing the school district homestead exemption from $140,000 to $180,000. This would save the average homeowner $380 per year before additional rate compression savings.
He also indicated that “at no time do younger homeowners pay for senior homeowners’ benefits or vice versa.”
During Patrick’s press conference, he stated that in order to completely eliminate school property taxes, the state would have to raise sales taxes by $0.14 to $0.15 cents on everything you buy.
Patrick also emphasized that eliminating all school property taxes would cost about $40 billion, which is currently the entire education budget. Additionally, he said that to eliminate all property taxes, the state would have to raise the sales tax by 25 to 26 cents.
While Patrick’s plan seems reasonable, others have criticized his proposal, saying that it’s “offering temporary relief instead of structural change.”
Texas Policy Research reviewed Patrick’s plan and found multiple flaws within it.
TPR lays out that the plan to lower the exemption from 65 to 55 only “shifts the burden to younger families, renters, and businesses,” due to the fact that it will not reduce local spending or shrink the tax rates.
Additionally, TPR explains that while Patrick argues that homestead exemptions will give more relief than compression, the exemptions will only “reassign who pays into it,” not reduce them. Compression of school property taxes will lower the school maintenance and operations tax rate for all homeowners and renters, as well as reduce the burden on employers and small businesses, resulting in relief for all taxpayers.
If both plans come to a vote, it will be up to voters to decide which plan would be better for their wallets, or if legislators need to look at other approaches to address the problem of property overtaxation.