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Going Further Than Prior Proposals, Abbott Unveils Plan To Slow Texas Property Tax Growth

Bob Daemmrich for The Texas Tribune
Gov. Greg Abbott and appointee Jimmy Blacklock arrive at a press conference at Texas Republican Party headquarters on Nov. 27, 2017.

HOUSTON — Gov. Greg Abbott on Tuesday unveiled a plan to "rein in skyrocketing property taxes" in Texas, looking to lay down a marker in a debate that dominated the legislative sessions last year and promises to remain front and center through the 2018 primaries and beyond.

"Under the plan I am announcing today, Texas will take action to limit property tax growth, secure private property rights and ensure that Texas remains the most exceptional state in the nation," Abbott, a Republican who is running for re-election this year, said in a statement as he embarked on a tour of the state — with stops planned here and in Arlington — to promote the plan. 

A key tenant of Abbott’s proposal is to prevent cities, counties and school districts from collecting more than 2.5 percent in property tax revenue than they did in a previous year without voter approval. That’s a far lower cap than controversial thresholds that twice failed to make it through the Legislature last year. And his plan would require that two-thirds of voters — well beyond a simple majority — approve any increase above that 2.5 percent threshold.

But Abbott’s plan also offers local leaders something last year’s property tax overhauls didn’t. The state would no longer be able to saddle local governments with providing new services without providing state funding to cover the costs, he said. And when it comes to funding public education — which makes up the majority of local property tax bills — Texas lawmakers would likely be required to put up more state funds under Abbott’s proposal.

“The state has, for too long, relied on the rapid growth of school district property tax collections to fund increases in public education spending,” his proposal says.

The governor’s plan would also subject school districts to the same revenue caps as cities and counties, which is almost certain to be controversial.

Another provision in the proposal would also require local governments to be more transparent about the debt they carry when asking voters to approve new bond packages. And it would also require a supermajority of voters to approve additional debt.

While the plan would slow increases in how much money local governments collectively take in, it wouldn’t necessarily lower individual property tax bills. The amount of money a landowner must pay each year is not just tied to the tax rates that local governments set. It is also determined by the appraised value of the land and any buildings on it. So a city could lower its tax rate and a homeowner could still pay more in property taxes than a previous year if the owner's assessed values have gone up. The cap in Abbott’s plan wouldn’t be applied to either the tax rate or the increase in appraised value -- it would only pertain to the total amount of money a local government collects on existing land and buildings.

It’s still unclear how much luck Abbott will have with lawmakers who return to Austin next year. Similar property tax overhauls failed amid an intra-Republican party war between the Senate and House last year, with members of each chamber blaming the other for the failures. But the lower chamber next year will have a new leader since House Speaker Joe Straus, R-San Antonio — often cast as the chief obstructor of Abbott and Republican Lt. Gov. Dan Patrick’s agenda — is not seeking another term.

The proposal is also expected to ignite anger from local leaders, who say state officials in recent years have overstepped their bounds and tried to control how cities, counties and school districts operate. In Texas, only local governments are allowed to collect property taxes. The state is largely funded by sales taxes. Texas is among seven states that don't have a state income tax.

But Abbott’s attempt could resonate with voters. More than three-fourths of voters in a University of Texas/Texas Tribune poll last year supported limits to local property tax increases. And while rising property taxes are unpopular, Texans still have one of the lowest state and local tax burdens in the country, according to the Tax Foundation, an independent nonprofit that researches taxes.

An analysis by that organization for 2012, the most recent year available, found that Texans must spend about 7.6 percent of their income on state and local taxes compared to a national average of 9.9 percent. That would mean Texans have the fifth lowest tax-to-income ratio when it comes to state and local taxes.

The Texas Tribune provided this story.

Brandon Formby writes about the challenges facing Texas’ largest metro areas as they experience unbridled growth. He joined the Tribune in October 2016 and is the organization’s first reporter based in Dallas. The Texas Tech University graduate spent more than 13 years at The Dallas Morning News, where he covered transportation, local government and politics.
Patrick Svitek is a reporter for the Texas Tribune. He previously worked for the Houston Chronicle's Austin bureau. He graduated in 2014 from Northwestern University's Medill School of Journalism. He originally is from Fort Wayne, Indiana.