Responsible limits on state spending growth are not only a priority for Republican voters, they’re critical to delivering lasting property tax relief. The state should use existing funding streams to permanently buy down local school property taxes until they’re phased out completely.
The existing “Robin Hood” funding system effectively allows lawmakers to over-tax property rich areas as a means of supplementing its own education budget. The system is not only complex, but has resulted in horrendous side effects.
Most notably, property taxpayers are being gouged without more money per student flowing into K-12 education. After the measure became law in 1993, the burden of funding education dramatically shifted away from the state and onto local taxpayers.
The Lone Star State’s rapid growth has only accelerated the problem, as growth generally drives up land values. The faster property values rise, the higher local property tax burdens become, and the more the funding burden shifts away from the state and onto local taxpayers.
Over the last ten years, local school taxes overall have increased six times faster than state appropriations (44% vs. 7%). In other words, Texans have been hit with skyrocketing property taxes while lawmakers have more of their budget freed up to spend elsewhere.
Too many lawmakers have stood idly by while assigning blame to local officials and have used education finance lawsuits as a scapegoat for postponing reform.
Lawmakers should be moving in the opposite direction, by permanently buying down local M&O (maintenance and operations) property taxes with state funds. But doing so requires fiscal discipline and lawmakers dedicated to only spending state tax dollars on essential needs.
According to the Texas Public Policy Foundation, if state spending had been limited to population growth plus inflation over each of the last ten years, the legislature would have spent $22 billion less during the 2016-17 budget cycle that it did. These annual surpluses – if not consumed by spending – could have been alternatively set aside for local property tax relief.
Imposing responsible spending limits on the state will allow it to absorb more of the K-12 funding burden over time, providing permanent tax relief to property owners.