To successfully pull off their stunts and tricks before audiences, great magicians employ the art of misdirection. The same is true for some politicians, such as Texas Lt. Gov. Dan Patrick, who has crafted a clever misdirection in the form of Senate Bill 2.
Patrick, a Houston Republican, claims the measure “would bring about the largest property tax reform in history,” and in so doing deliver massive tax cuts to homeowners.
But like all magic, it is an illusion that is quickly exposed by reality: Significant tax cuts for homeowners cannot be achieved without dealing with the largest, fiercest, most expensive and burdening tax on homeowners’ backs – the local school district property tax. That is no illusion.
“It’s a sleight of hand I think occurs when those in control of all aspects of state government need to find someone they can have as a villain — someone who has done something wrong — and they don’t want to look in the mirror,” said state Sen. Kirk Watson, D-Austin. “Where you would go to get the most bang for your buck in property tax relief is the school (property tax).”
He is right. Consider that about 55 percent of the taxes Texans pay are taxes levied by school districts. That is more than the collective share of the various other taxing jurisdictions, including cities (16 percent), counties (16 percent) and special districts, such as community colleges or hospital districts (13 percent). Those are not Watson’s figures, nor our figures; They are figures generated by the Texas Comptroller’s Office, occupied by a Republican. They are based on 2014 tax collections.
Patrick waxes on about the big tax relief to “local taxes” Senate Bill 2 would yield if the Legislature passes the measure. But he artfully ignores that SB 2 does not address the local school property tax. SB 2 would apply only to taxes levied by cities, counties, community colleges, hospital districts or other special districts.
Got that? It leaves untouched the very tax that is suffocating Texas homeowners across the state: the massive school property tax that finances Texas school districts.
That is verifiable by reading SB 2, sponsored by state Sen. Paul Bettencourt, R-Houston. His measure, dubbed the Texas Property Tax Reform and Relief Act of 2017, would have required cities and counties to get voter approval for tax increases of 5 percent or more. Currently, a tax ratification election only takes place if local governments raise taxes 8 percent or more — and if taxpayers petition to force the election.
That version of the bill flew through the Senate but stalled in the House, with Republicans who saw through the illusion citing their own doubts that it would achieve real tax relief if it excluded school property taxes.
Thanks to Gov. Greg Abbott, Patrick will get a second opportunity to pass SB 2 when the special sessions starts July 18. Abbott included tax reform as part of the charge for the special session.
By leaving the school property tax untouched, the tax bills homeowners will pay in future years will rise sharply. That’s because the state’s school finance system will lean more heavily on local school property taxes each year as property values rise. In other words, as property values go up, the state’s obligation to public education goes down.
Currently, the state share of the school funding system is 48.4 percent, while the local share is 47.5 percent, according to 2016-17 figures from the Texas Education Agency. The remainder mostly comes from federal sources.
That will shift, Watson told us, by 2019, when the state share of the Foundation School Program drops roughly to about 38 percent.
Analysis by the Legislative Budget Board, which develops budget and policy recommendations for legislative appropriations, among other things, bears that out.
“Increases in local revenue typically decrease state obligations to fund FSP (Foundation School Program) entitlement, and growth in local property values is projected to result in a decrease in state cost of about $4.25 billion for the 2016-17 biennium,” states the LBB’s Fiscal Size-Up report for 2016-17.
The illusion Patrick crafts in SB 2 might yield small tax cuts. But don’t be fooled. Patrick and the GOP-controlled Senate have their hands firmly in our wallets, snatching what they can to continue sustaining a broken school finance system.
But the illusions will continue until the public – and voters in particular – demand that Patrick and state leaders shelve their trick bag and tackle reality by providing real tax cuts to Texas homeowners in the way of school property taxes.