Gov. Greg Abbott has suggested allowing taxpayers to decide whether cities can raise or cut taxes. Voters would have a direct say on any increase, which would have to clear two -votes at the ballot box.
After Abbott announced his reelection campaign, promising to lower property taxes in a plan covering several areas, with cities and counties saying it is a move that puts local governments in a tight bind as the state grows.
Abbott has also called for eradicating school property taxes for homeowners and slowing growth in property values. The proposals are an extension of ideas lawmakers have tried in the past to rein in city and county tax bills. In 2018, lawmakers enacted tighter limits on how much more in property taxes cities and counties can collect without asking voters.
Lt. Gov. Dan Patrick, who leads the Texas Senate announced his own plans to drive down taxes, focusing on increasing tax cuts for homeowners.
Abbott and GOP legislators have grown frustrated that, for all the billions of dollars they’ve plugged into cutting school property tax bills, tax bills remain high, at least in part because city and county taxes have continued to grow.
To further curb local tax bills, Abbott seeks a spending cap on local governments, calling for local for tying local government spending increases to the rate of population growth plus inflation or 3.5%, whichever is less. The idea is to force cities and counties to prioritize core services using existing revenue.
Most recently, about 46 school districts and cities asked voters for permission to adopt a higher tax rate in November. Voters rejected 26 and approved 20. Under Abbott’s voter- approved tax increases, with all but one of those failing.
Additionally, under Abbott’s platform, another idea is to allow voters to call an election to reduce city or county tax rates if 15% of registered voters sign a petition. According to James Quintero, policy director at the Texas Public Policy Foundation’s Taxpayer Protection Project, “Local government spending is the problem. Local government spending limits are the solution.”
Some tax policy experts say it might be easier for lawmakers to tighten the state’s existing limits on how much more in property tax revenue cities and counties can collect each year without asking voters. Right now, that cap stands at 3.5%, with cities and counties complaining of strain on their budgets. Tax revenue collected from new construction doesn’t count toward the cap. City and county officials have said the 3.5% cap has strained their budgets. Lawmakers this year tried to take that cap down to 2.5% but couldn’t agree on other parts of the legislation. Meanwhile, tax appraisal districts are often seen as a big part of the problem because they can create unfair property tax burdens, undervalue commercial properties while overvaluing residential ones, leading to higher costs for homeowners who struggle to protest. Issues include unequal valuation, lack of transparency, inadequate protest tools, and potential retaliation, prompting legislative efforts to increase fairness and accountability through reforms like elected board members and appraisal freezes.
As long as tax appraisal districts increase values on property, it can offset any efforts to lower property tax bills.