The state should use existing funding streams to permanently buy down local school property taxes until they’re abolished, along with Robin Hood. If enacted, the average Texan would eventually see a 40 percent cut in their total property tax bill.
The existing “Robin Hood” funding system — known formally as the Ch. 41 Wealth Redistribution Program — effectively allows lawmakers to overtax property-rich areas as a means of supplementing public education spending. The system is a relic of a Democrat-controlled legislature, but Republicans have since done little to fix it.
Not only is the system complex, but it has resulted in horrendous side effects.
Most notably, property taxpayers are being gouged. Since becoming law in 1993 under Democrat rule, a larger portion of the education-funding burden eventually shifted onto local property taxpayers.
Texas’ rapid growth has only accelerated the problem, as population growth has generally driven up taxable land values. The faster property values have risen, the higher local property tax burdens have become and the more the funding burden has shifted away from the state and onto property taxpayers.
Over the last 10 years, local school taxes overall have increased six times faster than state appropriations (44 percent vs. 7 percent). Too many lawmakers have stood idly by while assigning blame to local officials. Too many local officials have blamed higher taxes and spending on state lawmakers. While local school officials are responsible for levying local property taxes, the state ultimately has authority to overhaul the system.
Lawmakers should act proactively by permanently buying down local M&O (maintenance and operations) property taxes with surplus state funds. But doing so requires fiscal discipline and lawmakers dedicated to only spending state tax dollars on essential needs.
If state lawmakers were to repeal “Robin Hood” using this method, taxpayers in “recapture” districts could pay far less in school taxes without cutting funding to their public schools. However, the state would need to find billions in tax revenue elsewhere to offset the revenue formerly collected by the Chapter 41 program. In 2018, that figure was more than $2.1 billion.
According to the Texas Public Policy Foundation, if state lawmakers capped the state’s budget growth at 4 percent per year — and dedicated 90 percent of the state’s forecasted budget surplus to cutting school taxes — the Robin Hood Tax could be phased out in 10 years.
By the 11th year, the entire local school tax for maintenance and operations (M&O) could be abolished, reducing the average Texan’s total property tax bill by 40 percent or more.
Imposing responsible spending limits on the state budget will allow it to absorb more of the K-12 funding burden over time, providing permanent tax relief to property owners.
TPPF’s proposal is the only plan to repeal Robin Hood completely, permanently cut property taxes for all Texans, and abolish a portion of the property tax system without raising or creating new taxes or fees.
For a year-by-year breakdown of how much property owners in each school district have paid in excessive “Robin Hood” property taxes since 1994, click here.