A proposal was put forward in the Senate this morning that would change what’s counted towards the state’s spending cap. Specifically, the proposed SB 15 by Sens. Jane Nelson, Kevin Eltife and Juan Hinojosa (and supported by Lt. Gov. Dan Patrick) would remove state expenditures for local property tax relief and debt payment from being counted.
I have always been uncomfortable with the practice of government counting true tax relief as spending; letting the people keep their money doesn’t cost anything. In the same way, when government collects too much money the “returning” shouldn’t be counted as spending.
But this is where it gets tricky. Because property taxes are assessed and levied locally, when the state buys down school property taxes, it does so as an expenditure to local government entities. Those entities are supposed to use the additional funding to reduce their property tax.
In the past, taxpayers haven’t felt much relief from such actions. Local entities often game the property tax system such that property owners’ tax bills don’t really go down.
Lawmakers must be careful that the final language, and especially the portion dealing with debt relief, does not inadvertently encourage additional spending or incentivize the creation of new future debt by taking such payments off the books.
If future lawmakers find they can amass debt, and then have the debt payments not count as spending, we could find ourselves with more debt, more spending and bigger government – which would be the opposite outcome intended with SB15!
Like so much else surrounding government, debt and the mechanics of other people spending your money, we must watch the language carefully as it moves through the legislative process.