While both chambers of the Texas Legislature are touting plans for the “biggest property tax cut in history,” a new analysis from the Huffines Liberty Foundation says the Senate’s plan “falls short.”
Written by former State Sen. Don Huffines and Bill Peacock, their analysis of the package of property tax bills heard in Wednesday’s Senate Finance Committee hearing says the proposal “only treats the symptoms of our broken property tax system while failing to address the underlying disease: incessant growth in local government and school district spending.”
The Senate’s plan would raise the homestead exemption from $40,000 to $70,000. The Huffines Foundation says that could cause property tax rates to rise.
“One problem with using exemptions is that it misdirects funds from the primary focus of providing property tax relief-buying down the school M&O property tax rates to zero. Additionally, homestead and business exemptions, like appraisal caps, cause rates to rise in order to maintain increased revenue from properties with lower taxable valuations,” the report reads.
The group has also criticized the package for not dedicating enough of the state’s $32.7 billion surplus towards relief. While the Senate has presented their plan as providing $16.5 billion in relief, much of that number is from existing property tax relief passed in previous sessions, leading to only $9.7 billion in new relief.
“To put it bluntly, property taxes are immoral. Any policy that keeps Texans from owning their own home, while at the same time forcing renters and businesses to carry a burden from which they get no relief, should not pass,” said Huffines. “It should not even be considered. I spend my time and treasure advocating for broad property tax relief where every citizen is a winner and treated equally. Texans have options; let’s explore them.”
Instead, the organization is promoting a five-step plan to eliminate M&O property tax:
Limit State Spending Growth: Limiting state spending growth to no more than 5.9% per biennium (2.9% annually) would provide budget surpluses that could be dedicated to property tax relief.
Freeze School M&O Property Taxes: Freezing school M&O property tax revenue at the current level stops school districts from undermining efforts to eliminate the M&O tax with constant increases.
Use 90% of Texas’ Budget Surpluses: Using 90% of state funds budget surpluses will provide enough funds to eliminate the M&O property tax in eight years (or less).
Require Voter Approval to Exceed the No-New-Revenue Tax Rate: Cities, counties, and special districts must ask voters for permission to exceed the no-new-revenue tax rate.
Enshrine Property Tax Relief in the Texas Constitution: Property tax relief must be made permanent by passing an amendment to the Texas Constitution.