Analysis: The Texas House is handcuffing property tax relief to education reforms

Texas Tribune Blue Government News

House Speaker Dennis Bonnen and State Rep. Dustin Burrows, R-Lubbock, meet with other state representatives on the house floor on April 11, 2019.
House Speaker Dennis Bonnen and State Rep. Dustin Burrows, R-Lubbock, meet with other state representatives on the house floor on April 11, 2019.
Miguel Gutierrez Jr./The Texas Tribune

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Texas isn’t going to get any action on property taxes without reforms to school finance, if the latest House maneuver is the barometer.

The House Ways & Means Committee approved its version of a Senate property tax bill on Thursday, inserting an all-or-nothing clause that makes the tax bill contingent on approval of a related school finance measure.

Look, this isn’t rocket science: It’s easier to get lawmakers to restrain local property tax increases than it is to get them to make big changes to complicated school formulas and education policy. Education is a top concern of voters, but property taxes are a particular point of pain for them and lawmakers want to do something about it.

That’s the only possible explanation for the big idea of the moment: A sales-tax-increase-for-property-tax-decrease swap proposed by the state’s top three Republican officeholders.

We’re in an odd spot when GOP headliners want a tax increase and one of them — Lt. Gov. Dan Patrick — is even pushing for a $5,000 teacher pay raise straight out of the Democratic and teacher association playbook. Strange times.

But this stuff is hard, and the easy thing to do with less than five weeks remaining would be to pass some property tax restraints and push the education stuff into a special session — or into the next regular session in 2021.

Not gonna happen. First, because nobody will say out loud that it’s a good idea. And now, more firmly, because a House committee has handcuffed the property tax bill to the education bill.

It makes some policy sense. People who are complaining about property taxes are doing so, whether they know it or not, because of school taxes. School taxes are rising with property values. The state’s been taking advantage of that, using state-written formulas to lower state spending as local property taxes rise. The comptroller has said the state currently covers only 36 percent of public school funding, while local property taxes cover 64 percent. Balancing that would take pressure off of property taxes, but require the state to put up the money.

The property tax legislation tagged by the House doesn’t actually lower property taxes. It requires voter approval when city, county or emergency district property tax revenues rise by 3.5% or more, or when school property tax revenues rise by 2% or more.

It makes a lot of political sense, too, subverting anyone who had the idea of limiting property taxes and leaving school finance for later.

It also moves the gears a notch. Property tax legislation is moving in the House. The Senate has taken up, but not voted on, its version of the school finance and education bill, with indications of a committee vote next week.

A bigger property tax fix, endorsed by Patrick, Gov. Greg Abbott, and House Speaker Dennis Bonnen, would let voters decide whether to raise state sales taxes by a penny, to 7.25%, to raise roughly $5 billion, with most or all of that going to property tax relief (the House would use 20% of the money for schools and the rest for property taxes; Senate proposals would use all of the money for property tax cuts).

That one has run into strong headwinds from both the left — Democrats don’t take kindly to regressive consumption taxes that land more heavily on the poor — and the right — conservatives aren’t rushing to get in line to raise taxes of any kind.

Still, there is a strong interest in the Legislation for a property tax cut, if they can find the money to make it possible. The Senate has an informal working group, headed by Sen. Jane Nelson, R-Lewisville, to find some answers. Some trial balloons are in the air: One proposal would raise homestead exemptions statewide, giving homeowners a tax break and shifting the cost for that to other taxpayers, all at no cost to the state; another would divert some of the oil and gas taxes that now go into the state’s savings — the economic stabilization fund — and use those to buy down property taxes.

However they solve the puzzle, they’ll have to get a school finance package together. The House is signaling that tackling property taxes alone won’t fly. It’s a version of mom’s rule: Eat your vegetables, or no dessert.