With Texans wanting their tax bills lowered, Gov. Greg Abbott put property tax relief on the Texas Legislature’s to-do list in the first special session of this year. One way the Legislature could deliver this relief is by using federal taxpayer dollars, but long-term sustained relief requires “a complete rethinking.”

The Texas Public Policy Foundation recently reported state property taxes skyrocketed 181 percent in the last 20 years—far more than population growth plus inflation—and that a substantial majority of state voters agree the taxes are “a major burden for them and their family.”

The Texas Legislature didn’t deliver meaningful reductions in these tax bills during this year’s regular session, and Gov. Greg Abbott put property tax relief on the agenda for the current special session. TPPF’s polling found 71 percent of registered state voters would be upset if the session “ended with nothing done to address property taxes.”

Possible Solution

In an interview with Texas Scorecard, James Quintero of TPPF discussed an option the Legislature may pursue to deliver relief: using federal taxpayer monies. Specifically, some or all of the incoming Coronavirus State Fiscal Recovery Relief federal funds.

“We’ve got about $16 billion coming down from the federal government, which, again, will be largely appropriated in the fall of this year,” he said, adding that TPPF is working through the logistics of this plan and educating lawmakers. “I hope lawmakers will seriously consider prioritizing the family budget over the government’s budget.” Quintero hasn’t yet been able to project how much this one-time relief could lower homeowners’ property tax bills.

There is a wrinkle, though. Congress put a rule in the America Rescue Plan Act (ARPA) saying federal taxpayer monies within it can’t be used for tax relief; the Biden–Harris administration prefers that it go to government employees. “But that provision may not stand for long,” Quintero noted. “A recent court case out of Ohio went against the Biden administration’s implementation of the rule, which may ultimately bode well for Texas’ own designs.”

He’s referring to the ruling from federal Judge Douglas Cole, which strikes down the no-tax relief provision in ARPA. That same day, Ohio Gov. Mike DeWine (R) signed into law the new state budget, which reportedly lowers taxes for all state taxpayers.

Tim Hardin, executive director of Texans for Fiscal Responsibility, reviewed the proposal to use federal taxpayer monies to deliver relief, saying it would be “a net positive.”

“This is not the permanent property tax relief that Texas taxpayers asked for. This would be a one-time fix,” Hardin told Texas Scorecard. “However, it would help out for the following biennium, giving homeowners a break from the overwhelming burden of rising property taxes.”

Currently, Quintero also agrees it would only be one-time tax relief. “But our hope is that the 2023 Legislature will take steps to make some portion of it permanent. And we have many ideas on how to make that happen,” he added.

“The reality is that in a special session, it is going to be very hard to fix our broken tax system permanently,” Hardin stated. “The problems are more than can be patched up by a bill in a special session.”

Long-Term Tax Relief

Hardin and Quintero agree the path forward for ongoing property tax relief is radical reform. “We can’t keep applying band-aids to this broken system and expect to be successful,” Quintero said.

“The problems with the Texas budget are systemic and would require a complete rethinking of how we fund our state, our education system, and what controls and accountability we place on local governments,” Hardin stated. “This should be the goal of the next Legislature, and the relief the federal funds provide should be the baseline moving forward. As we continue to make changes to the system, we should always aim at lowering property taxes every biennium until their complete elimination.”

Quintero offered some concrete ideas on what “controls and accountability” on local governments could look like. ”Every city, county, and school district ought to [be] required to do things like efficiency audits, zero-based budgeting, and lean six sigma,” he said. He added that a strong limit on local spending is needed to bring fiscal discipline. “Only by getting spending under control will we ever have a shot at keeping taxes low.”

Another possible solution long-term solution Quintero proposed is incrementally replacing the school district Maintenance & Operation (M&O) property tax with surplus state tax dollars. “Limiting state spending to population and inflation and directing the surplus to school taxes this way gets you a few things: It limits state spending in a good way, it provides immediate tax relief, and it gets rid of the awful Robin Hood system,” he explained.

When asked about using federal taxpayer monies to deliver property tax relief instead of the state solving this alone, Quintero said the money still “comes from the same person.”

“What we’re ultimately hoping to do [is] return the money back to its rightful owner—the taxpayer.”

Citizens concerned about short- and long-term tax relief may contact Gov. Abbott, their state senator, and their state representative.