Though property taxes in Texas are already out of control, some local school districts are seeking to use the state’s 2015 property tax cuts as an opportunity to collect even more taxes.
Fortunately, Texas Attorney General Ken Paxton is going to court to fight them.
Last year, the Texas Legislature placed a constitutional amendment on the ballot to provide much needed property tax relief to homeowners in Texas by raising the homestead exemption from $15,000 to $25,000. In the process, the state held school districts harmless by using state funds to make up the difference.
After the law passed the Legislature, it had to go before voters for approval. On the November ballot 86% of voters approved of the property tax cut.
However, during the period between the bill’s passage and the passage of the ballot referendum, several school districts lowered their own local homestead exemptions in an attempt to collect more revenue and defeat the spirit of the voter-approved tax cut.
The way it worked was simple:
Imagine Hypothetical ISD, which offered an optional local homestead exemption of 10%. Combined with the state’s exemption of $15,000, a total of $30,000 would be exempted from taxation on a $150,000 home.
When the state increased its homestead exemption to $25,000, the homeowner in HISD should have been given a break. After all, $25,000 plus $15,000 should allow for an exemption of $40,000.
But what if HISD reduced its own exemption to just $5,000 at the same time? Then, despite the tax cut approved by voters, the total ($25,000+$5,000) homestead exemption for property owners would remain only $30,000.
So much for tax relief.
In order to prevent districts from playing games with their rates, lawmakers prohibited districts from lowering their own homestead exemptions below their 2014 rates. But several of the districts defied the law and cut their local exemptions anyway, forcing Paxton to file suit against them.
“It is a clear sleight-of-hand reduction in the local option homestead exemption by a handful of school districts.” said Paxton. “This is an attempted money-grab, pure and simple. These districts clearly intend to undermine state law and negate the tax break. Not only is this lawsuit about standing up for the homeowners in these school districts, but also voters across the state.”
The lawsuit is part of a recent effort by Paxton’s office to fight back against local governments who seize power outside the law. Paxton has also been leading the fight against local governments to ban the possession of handguns in violation of state law.