Texas families are facing an affordability crisis that is being exacerbated by property taxes: a never-ending tax that, fundamentally, serves as a form of perpetual rent to the government. 

While the Legislature has taken steps recently to address the rising burden of property taxes, these efforts have unfortunately fallen short, and not gone nearly far enough. 

With the passage of SB 2 last year, the Legislature provided 12.7 billion dollars in new relief for School M&O property taxes. This amounted to the second largest property tax cut in Texas history, less than half of the State’s $32.7 billion surplus, and fell short of 2007’s $14.2 billion property tax relief. 

This translated to mediocre tax relief for property owners across the State, at best, due in part because cities, counties, and special purpose districts all increased taxes substantially, off-setting efforts by the legislature. 

The key problem is government spending: Record levels of State spending resulted in less revenue available for tax relief, and increases in local government spending off-set the relief that was provided. 

Going forward, putting Texas on a permanent path to eliminating school M&O property taxes must be the objective, and can be achieved with these steps: 

• First, the Legislature must reverse the trend of rapid state spending increases by freezing state appropriations and cutting spending, thereby growing the surplus that is available for tax relief. 

• Second, curtail local government spending by capping spending increases to the rate of population growth plus inflation, at a minimum.

• Third, school M&O property taxes should be frozen until they are eliminated, and the voter approval rate should be lowered to that of the No New Revenue Rate for all other taxing entities. 

• Finally, the legislature should use 90% of future surplus revenue (i.e. over collected taxpayer money) to compress school M&O rates until the tax is eliminated entirely. Forms of relief such as the homestead exemption should be completely avoided, as it is not sustainable, shifts the tax burden from one group of property owners to another, and fails to provide any relief to other property owners, small business owners or renters.  

These steps will bring us much closer to true property ownership, and more than anything else will foster an environment in which small businesses and Texas families can truly thrive and prosper. 

Texas families deserve this now, more than ever. 

Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!

Get The Fiscal Note, our free weekly roll-up on all the current events that could impact your wallet. Subscribe today!