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You may not have gotten a big raise in the past few years, but your cities, counties, school districts and special districts sure have.
According to a recent report from the Texas comptroller, local government coffers have become swollen with new revenues over the past two decades, thanks to persistently high increases in the property tax.
From 1996 to 2015, property taxes levied statewide grew an average of almost 6 percent every year, including through the dot-com crash and at the height of the Great Recession. That’s well above basic economic measures, such as population and inflation, and such an aggressive growth pattern has given rise to a monster tax.
In 2015, local governments soaked homeowners and businesses for a staggering $52 billion, or more than $1,900 for every man, woman and child in the Lone Star State. That’s up by $3 billion compared to the previous year and almost $19 billion from 10 years ago.
At $52 billion, the property tax easily brings in the most tax dollars of any state or local source. In fact, it brings in more than double the revenue of the next largest, the state sales tax.
There’s no question that property taxes are burgeoning and beastly. The data show as much. But what may not be clear is what to do about it all.
While there are no silver bullets for Texas’ broken property tax system — which is another reason it should be eliminated entirely and the revenue replaced with an expanded sales tax — there are a handful of good government reforms that could improve it greatly and aid struggling homeowners and businesses.
One such reform, long championed by fiscal conservatives and tax-weary Texans, involves lowering the rollback tax rate from the current 8 percent to the lesser of 4 percent or population growth plus inflation. Reducing the rate would help slow the pace of future tax increases since budgets that bust the limit would be subject to voter approval. And local spendthrifts probably aren’t going to want to risk a very public defeat at the ballot box unless it’s absolutely necessary.
A second reform, closely tied to the first, involves changing how rollback rate elections happen. Under the current setup, elections only occur when residents gather and submit signatures to the governing body in a tight time frame for the purpose of calling for a vote. That’s a costly and cumbersome process to force on Texans who are already busy working and raising a family.
A better way to structure the election process is to require that they be held automatically when and if the reduced rollback rate is exceeded. This would put the onus on local officials — where it belongs.
These are the sort of structural reforms needed to start getting a handle on Texas’ raging property tax problem. Without changing the nature of the system itself, it’s hard to see how the situation doesn’t continue to spiral out of control, as clearly depicted in the comptroller’s report.
Fortunately for those hungry for change, there’s also an obvious appetite at the state Capitol for something better. Already, lawmakers in the House and the Senate have filed bills to reduce the rollback rate, require automatic elections, reform the appraisal process, and more.
While the session is relatively young, it looks promising that Texans may get what they so desperately need from this new Legislature — long-lasting property tax reform that prioritizes the family budget over local government’s budget.
James Quintero is director of the Center for Local Governance and leads the Think Local Liberty project at the Texas Public Policy Foundation.
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