Speaking at a news conference last month, Gov. Greg Abbott lambasted Texas’ broken property tax system, expressing the kind of frustration and fatigue that have become familiar to us all.
“Texans are fed up with property taxes being raised with impunity. They are tired of endless government spending while honest, hard-working people struggle just to keep up with paying their tax bills. We can no longer sit idly by while homeowners are reduced to tenants of their very own property with taxing authorities playing the role of landlord,” he said.
Abbott then pivoted to unveil an ambitious new plan to restore common sense and conservatism back to Texas’ tax environment. Central to this plan are three key proposals:
The first involves slowing revenue growth. One of the biggest problems with today’s property tax system is that the burden is growing excessively. Since 1997, property taxes levied statewide have grown by roughly 200 percent. By comparison, inflation increased by a little less than 50 percent — and the population grew by only 40 percent. That’s a big delta between how fast taxes are growing and how fast taxes should be growing.
To tap the brakes on things a little, the governor is calling for a soft cap on steep tax increases. That is, local governments would be restricted from raising property tax revenues by more than 2.5 percent — excluding new growth — in any one year without voter approval. Officials wanting more than the limit allows could still get what they want, but they must first convince the public to say “yes” at the ballot box.
Creating a consistent framework that applies to all levels of local government and that puts downward pressure on the growth of taxes — unless voters say otherwise — is arguably the single best proposal in the governor’s plan. If enacted, it would immediately force local officials to better prioritize their budgets, drive a new wave of government accountability, and encourage greater public participation at critical moments.
The second takes aim at local debt. Right now, local governments in Texas are awash in a sea of red ink — and the cost of servicing all that debt is an expensive venture.
Recognizing the link between more debt and higher taxes, the plan pushes a multipronged approach, including: arming voters with more information at the ballot box, so that they can better understand the financial impact of their decisions; tightening the criteria for officials to use nonvoter-approved debt instruments, like certificates of obligation; and requiring a two-thirds supermajority vote before any new debts are approved.
Collectively, these ideas have the potential to radically reshape Texas’ local debt landscape by empowering voters and slowing at least some of the rapid accumulation of red ink, which is proving to be a burden both now and into the future.
The third and final concerns appraisal reform. The governor’s plan puts forward a lot of different ideas on how to protect taxpayers from a troubled appraisal process and all are important — but one is especially prominent: a proposal to “ensure that the appraised value of a property cannot be increased as a result of appraisal appeal.”
At issue here is a concern that some taxpayers may see a downside from protesting their property values to the appraisal review board, something that should alarm just about everyone. It goes without saying that no Texan should risk financial injury for asking questions of the Appraisal Review Board and, clearly, legislation is needed to protect taxpayers.
There’s no silver bullet solution to Texas’ property tax problem, but Abbott’s comprehensive approach to tackling the tax burden is just what taxed-out Texans need. If enacted, the plan promises to ease the swelling by limiting revenue growth, slowing the imposition of future taxes by reforming local debt, and changing internal processes to better protect taxpayers.
That’s something we should all be able to get behind.
Quintero leads the Think Local Liberty project.