April 16, 2019
Yesterday, the Texas Senate passed property tax legislation under duress and over objections.
The Legislature must take action to address rapidly rising property taxes. No question. But Senate Bill 2 won’t do it. In fact, it further tips the balance in favor of commercial property owners at the expense of homeowners. I voted no.
The legislation that could provide true property tax relief — House Bill 3, the school finance bill — was being held hostage to secure passage of this legislation, which only creates the appearance of property tax relief.
In fact, the illusion of property tax relief was deemed so essential that the possibility of the “nuclear option” was invoked. The “nuclear option” refers to an unprecedented procedural maneuver that probably doesn’t matter to folks who just want lower property taxes. But it’s a big, big deal to those of us who care about the Texas Senate and the tradition of deliberation that was once revered in this chamber. A tradition of deliberation we sorely need in government.
That threat prompted my good friend, Sen. Kel Seliger, to flip his vote and allow the bill to come to the floor. Sen. Seliger, a Republican and the former mayor of Amarillo, knows that local governments aren’t the reason that folks are rightfully frustrated with property taxes but he also knows that raw power grabs can do damage to future collaboration and do little but make partisan politics even worse.
Who’s the Problem
The biggest culprit in rising property taxes is the Legislature.
As property values go up, the Legislature’s responsibility for public school funding goes down. Over the past six years, the growth in property values across the state has generated an additional $10 billion in local property tax revenue, which has freed up the same amount in state dollars to be spent according to the will of the Legislature.
Those state dollars could have been invested in lowering school tax rates or increasing the homestead exemption — if controlling property taxes had been the priority. But those in control of the Capitol had more pressing priorities, such as franchise tax cuts for businesses. That revenue stream was actually supposed to help with property taxes. Instead, those controlling the Capitol cut it by billions of dollars—again, dollars that could have provided property tax relief—and everyone else has paid the price.
The guilty need others to blame. They complain that cities and counties are the problem when it’s really the state’s failure to fund its constitutional obligation for schools and its over reliance on local property tax dollars to meet that obligation.
You can’t be both the victim and the perpetrator.
While SB 2 takes aim at local governments, we all know that it was the Legislature’s willful neglect that created this crisis. And SB 2 won’t don’t anything to fix it. Instead, it will hinder local governments in making decisions about funding police, fire, EMS, parks, playgrounds and libraries. I guess getting elected to the legislature somehow makes a person smarter than the folks that get elected to make the local decisions on these important items.
And now, a tax increase
The sudden chatter about about a sales tax/property tax swap suggests that folks throughout the Capitol know that their big proposals so far won’t live up to expectations.
So now they’re floating a constitutional amendment to increase the sales tax and use the revenue to buy down property taxes. They’ve called it a 1-cent increase. It’s more than that. It would take the sales tax from 6.25% on the purchase of most things you buy to 7.25%. That adds up for families.
Most people wouldn’t see a net tax cut under that scenario. In fact, only homeowners with incomes of more than $149,000 would come out ahead. And renters — more than 50 percent of Austin residents are renters— would take it on the chin because they’d pay more in sales tax but wouldn’t see a decrease in rent unless their landlord is very, very generous.
It’s simply unacceptable to me that the Legislature is considering raising taxes on the many to lower taxes for a few.
This crisis was created over many years and it will take time to address it. Perhaps if those in control the Legislature were honest with Texans, they wouldn’t be tossing out half-baked and damaging ideas in the last third of the legislative session.