Texas taxpayers have an urgent need for property tax relief, which should include a clear path to eliminating school district maintenance and operations (M&O) property taxes—the largest portion of Texans’ property tax bills. Despite claims of historic tax cuts, Texans continue to see rising property taxes because state and local governments refuse to control excessive spending.
In the last session, the Legislature allocated $12.7 billion in new property tax relief, yet property tax bills still increased across the state. Much of this so-called relief was tied up in raising the homestead exemption from $40,000 to $100,000 rather than focusing on tax rate compression, and local governments continued hiking tax levies. This was not the largest tax cut in Texas history—property taxes didn’t go down; they went up. Texans will never see meaningful, lasting relief until lawmakers address reckless spending and local tax hikes.
Even after SB 2 was passed in 2019 to limit property tax growth, loopholes have allowed local governments to continue raising taxes without real accountability. These loopholes must be closed, and spending must be controlled to ensure taxpayers get the promised relief. The only way to achieve meaningful property tax reduction is to aggressively compress school district M&O tax rates while requiring local governments to lower their property tax rates instead of shifting the burden elsewhere.
Texas has a $24 billion surplus of overcollected taxpayer money and $28 billion in the Rainy Day Fund, yet much of it is being hoarded instead of used for tax relief. These funds should be returned to taxpayers by eliminating school district M&O property taxes. If this money isn’t used for permanent property tax reduction, it will only encourage more government growth, making tax cuts even more challenging in the future. The problem is not a lack of funding—it is out-of-control spending. Since 1996, property taxes have grown at an average rate of 6.1 percent per year, far exceeding the rate of population growth and inflation. Texans now pay more than $50,000 per student in total school-related costs, which includes maintenance and operations, debt, and unfunded teacher pension liabilities, yet student performance has declined. Per-student spending of more than $15,00 annually has increased 48 percent since 2011, while eighth-grade math proficiency has dropped by 40 percent. The state cannot continue pouring more money into an inefficient government school monopoly and expect better results.
The best way to lower property taxes is to spend less and compress tax rates, using state funds to buy down school district M&O tax rates until they reach zero. Governor Greg Abbott has called for at least $10 billion in property tax relief, yet HB 8 only provides $2.8 billion in new compression. The other $3 billion proposed for compression is in HB 1, the budget, because of HB 3 in 2019. These actions are insufficient to prevent local governments from undoing tax cuts through higher spending and other tax increases. The Legislature must ensure that local governments do not raise other taxes or debt as school district M&O rates are reduced.
Texas must impose strict spending limits at the state and local levels to prevent excessive government growth. The most effective way to do this is by capping all spending at a maximum rate based on the prior three-year annual average of population growth plus inflation, as outlined by Americans for Tax Reform’s Sustainable Budget Project. This ensures that the government does not grow faster than the taxpayers’ ability to fund it. However, given recent spending excesses, Texas should go further and freeze the budget with zero growth or even implement spending cuts to ensure tax relief is maximized, as highlighted by Texans for Fiscal Responsibility.
Other states are aggressively cutting taxes and putting income taxes on a path to elimination, meaning Texas cannot afford to sit back and assume it will always be the country’s economic powerhouse. States like Louisiana, Iowa, and North Carolina have made structural changes to lower tax burdens, making their economies more competitive. If Texas continues growing government instead of cutting taxes, it risks losing its economic edge. The best way to remain a leader is to cut spending, eliminate school district M&O property taxes, and reject tax shifts that only move the burden around rather than reduce it. One tax shift that must be rejected is raising the homestead exemption. Lawmakers have already increased it to $100,000, yet property tax bills continue rising. This highlights that exemptions do not solve the problem—they only shift the tax burden onto renters, businesses, and other property owners. Instead of playing favorites with exemptions, the state should focus on eliminating school district M&O property taxes through compression, which benefits all taxpayers.
Additionally, the loopholes in SB 2 from 2019 must be closed to ensure that tax relief is real and long-lasting. Local governments have exploited these loopholes to continue raising taxes without voter approval. The Legislature should take the following steps to fix these issues:
- Cover all property tax collections from new and existing properties to prevent local governments from hiding tax increases behind new developments.
- Eliminate natural disaster exemptions that allow local officials to raise taxes without voter approval under the pretense of an emergency.
- Use the no-new-revenue rate as the baseline for tax changes, ensuring that any tax increase is transparent and subject to voter approval.
- Require at least a two-thirds vote by any local governing body to raise property taxes, making it harder for politicians to increase taxes without broad support.
Without these reforms, Texans will continue seeing their property tax bills rise no matter how much relief the state provides. Local governments have become too aggressive in raising taxes and spending without restraint, and unless these issues are addressed, they will continue exploiting technicalities to tax Texans more. Texas must commit to cutting state and local spending, compressing school district M&O property taxes until they are eliminated, and preventing local governments from shifting the tax burden elsewhere. This will provide permanent tax relief, keep Texas competitive, and ensure that families can afford to own their homes without fearing rising property taxes.
Instead of expanding government, lawmakers should cut waste, eliminate fraud, and return money to taxpayers. Texas should not hoard billions in tax dollars while families struggle with rising costs. The state should also reduce severance taxes on oil and gas companies, ensuring that Texas remains the world’s energy leader and that money stays in the pockets of those who earned it. Texans deserve real tax relief, not more political games.
HB 8 must be strengthened to prevent local governments from undoing tax cuts, enforcing strict spending caps, and dedicating more surplus money to eliminating school property taxes. Now is the time to act and make Texas the best place to live, work, and raise a family.
Vance Ginn, Ph.D., is president of Ginn Economic Consulting and a contributor to more than 20 think tanks, including Americans for Tax Reform and Texans for Fiscal Responsibility. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the first Trump White House’s Office of Management and Budget. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get more of his research at vanceginn.com.
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