What’s Next for Property Taxes?

What’s Next for Property Taxes?

If a man is from Texas, he’ll tell you, Chicago Journalist John Gunther once wrote. If he’s not, why embarrass him by asking?

It’s true that Texans are plain-spoken. And for years, Texas taxpayers have told their lawmakers that property taxes are just too high, and getting higher at an unsustainable pace. And we have insisted that something be done.

Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen have listened—and led. Last month, Gov. Abbott signed Senate Bill 2, one of the most consequential tax reform measures in state history.

It’s fitting that he signed the bill on the premises of Wally’s Burger Express, an Austin institution (known for butterscotch milkshakes) that symbolizes the problem. A number of iconic Austin eateries have closed in recent years as property values—and property taxes—have risen.

Robert Mayfield, who owns Wally’s, says, “This is going to make it a lot easier to pass this business on to our grandchildren one day.”

At the heart of SB 2’s reforms is a revenue trigger—a limit to how much cities, counties, schools and other taxing entities can raise our taxes without going to the voters for approval.

Before SB 2, Texas had a rollback rate of 8 percent. If taxing entities reached that limit, then citizens could petition for a rollback election—an exceedingly difficult process, which involved gathering and verifying signatures within a strict time limit. 

The new rate for cities, counties and other local entities (apart from public schools) is 3.5 percent—and the election when that limit is reached or exceeded is automatic, not petition-driven. That’s why it’s a revenue trigger—not a cap. 

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We heard plenty of grousing from local officials about how much money they’ll lose. Let’s be clear. They’re not losing a dime because of SB 2. And they can still raise taxes all they want; the difference now is that if they wish to exceed the new limit, they’ll have to make their case to the voters. They may not relish that thought; Austin officials, for example, might have to answer questions about employing artists in its flood control department, among others, and spending hundreds of thousands of dollars to clean a single downtown toilet

For schools, the new limit is 2.5 percent, with no option for going over.

This means that Texans get a bigger say in how much government we have. And we deserve that.

Legislators also put a $5 billion down-payment on tax relief.

It’s important to note that these reforms didn’t happen overnight. It took years of work—organizing the Texas grassroots, formulating policy positions backed by solid research, cultivating relationships with lawmakers and channeling public sentiment in the most effective manner. The Texas Public Policy Foundation and Americans for Prosperity are proud to have been a part of these efforts.

But our job isn’t finished. Property taxes are still a burden on Texans, driving many out of their homes and businesses.

Already, we’re hearing cities talk about raising their fees and community colleges talk about raising tuition. Summer in Texas means budget time, and cities, counties and schools will soon be setting their budgets and tax rates for the upcoming fiscal year. 

All the grassroots activists who made their voices heard in Austin are home now, and they’ll be watching closely to see how their local taxing entities respond to property tax reform.

They’ll also be thanking their legislators, who did the right thing by standing firm against an onslaught of lobbyists (many paid for with taxes) who didn’t want this reform to pass. We’ll let our lawmakers—who are also our neighbors—know we appreciate their bold action. 

There will be another opportunity to advance these reforms in 2021, when the Legislature reconvenes. We look forward to working with lawmakers again, and continuing this movement of returning power to Texas. We’d like to see an end to taxpayer-funded lobbying, reforms to our criminal justice system to make it smarter on crime, and giving families more opportunity to determine the best education for their children.

Texans are plain-spoken folks. It’s good to know our leaders are listening.

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