Texas Property Tax Relief May Only be Temporary.

It’s been in all the news lately, but just in case you haven’t yet heard, the Texas Legislature has finally passed property tax relief for the people of the Lone Star State. That’s the good news. 

What’s the bad? 

The tax cuts and associated savings could have been much deeper, are only temporary, and property taxes may go right back up. You would think that a property tax relief plan that was seven months and three legislative sessions in the making would provide a permanent fix. 

After all, cutting property taxes was the top priority of the Republican Governor, the Republican Lieutenant Governor, the Republican Speaker of the House, as well the vast majority of Texans.

You would have thought property tax relief would be a slam dunk and would have passed early in the regular session of the legislature. After all, lawmakers had the good fortune of being blessed with a $33 billion budget surplus and tens of billions more in the so-called “Rainy Day” Fund. Many in both the House and Senate believed their respective plans to be the best path forward and, surprisingly, weren’t much in the mood for compromise. 

Fortunately for taxpayers, common ground was finally achieved in the last weeks of the second special session with both the Texas House and Senate passing an agreed upon tax relief measure out of their respective chambers and sending it on to the Governor for his signature.

Texas voters need to show up to the polls in November and vote YES on the Constitutional Amendment before homeowners and small business owners will start seeing any relief.

How much relief?

Good question. 

It all depends on who you ask, and the Devil is definitely in the details. Many lawmakers are calling this the largest property tax cut in Texas history. It isn’t. The real record-holder remains the 2006 Texas property tax cut relief which was valued at $14.2 billion. Adjusted for inflation, today’s legislators would have needed to deliver at least $20 billion of new property tax relief to claim the title of “largest in history.” Even using fuzzy math and claiming credit for tax relief already achieved by previous legislative action, the $18 billion in projected tax savings is still two billion shy of the record and uses only about half of the surplus revenue which was available for lawmakers to spend on property tax relief.

So, what exactly can taxpayers expect from this plan?

Let’s see what it includes:

• $12 billion to decrease the school property tax rate

• Homestead exemptions increase from $40,000 to $100,000

• Non-homesteaded residential and commercial properties, valued at $5 million and under will receive a 20% so-called “circuit breaker” on appraised values as part of a “pilot project” which will go away after three years.

• Allows taxpayers to hold their appraisal review boards accountable by creating newly elected positions on local boards.

• Doubles the current franchise tax exemption to small businesses to $2.47 million, taking thousands of small businesses off the franchise tax rolls and removes the needless requirement to file a tax return when no tax is due.

• Most importantly, for at least two years, 5.7 million Texas homeowners will save on property taxes— approximately $1,400 a year, with senior homeowners saving $1,600 a year (based on an average home value of $331,000).

That’s real money and significant savings.

Texans should be pleased. It’s a great start and lawmakers should be commended for their actions. But, while this legislation provides temporary relief, without permanent reform, any relief can be quickly nullified. For instance, since the Legislature passed the 2006 tax cut, property taxes in Texas have ballooned by over 85%. The figures speak for themselves.

That means we need to cap appraisal increases to 5% annually so that increased valuations don’t eat up tax savings in future years and so folks can truly own their homes and not be held hostage by skyrocketing valuations. It also means subjecting taxing entities to efficiency audits and setting fiscally responsible limits on local and state government spending.

Finally, it means not resting upon our laurels and demanding action so Texas can eventually eliminate school property taxes once and for all. It’s a worthy goal and one that, if achieved, will continue to make home ownership affordable, allow small business to flourish, and Texas to continue to remain a beacon state and the last, best place.

Be sure to go to the polls in November and make your voice heard. 

Then continue to make it heard so we can solve this crucial issue once and for all. 

After all, a little straight talk never hurt anyone!