WHAT’S IN YOUR MONTHLY HOUSE PAYMENT?
The 2005 American Community Survey, done by the U.S. Census Bureau, shows that among all 50 states, Texas ranks 23rd (almost the exact middle) in terms of “monthly owner-occupied housing costs.” (Amount = $1,220.)
These costs include mortgages, taxes, utilities, and insurance. So how much does each of those individual costs contribute to the total?
We know that in 2003-04, Texas ranked 14th (relatively high) in per capita local property taxes, but that was before school finance reform legislation undoubtedly reduced that ranking. (Data from 2003-04 is the most recent information available.)
But of the total property tax burden in Texas, municipal property tax levied on residential property is only a small portion. That’s because: (a) only 53.8 percent of all property tax in Texas is levied on single-family residences, and (b) only 14.9 percent of that amount is imposed by cities.
What about homeowner insurance premiums? Texas ranks #1 at $114 monthly, 188% of the U.S. average.
What about electricity prices? Texas ranks #12 at 10.93 cents/KWh, 116% of the national average.
What about natural gas prices? Texas ranks 29th in the nation (about average) at 95% of the national average.
Bottom line: monthly homeowner costs in Texas are about average among all the states and would be much lower if it weren’t for the extraordinarily high costs of electricity and insurance.
And there’s more…
Some of the individuals and groups who are the most vocal in criticizing the local property tax forget to differentiate among the various types of local governments. While it is true that Texans pay more property tax than any other state or local tax, just saying that doesn’t tell the whole story; the chart below says much more about the burden of each tax paid by Texans to the state or local governments.
| State/Local Tax | Amount ($Millions, 2004) | Percent of Total |
| School Property Tax | $18,533.965 | 28.39% |
| State Sales Tax | $16,312.811 | 24.99% |
| Other State Taxes | $13,525.467 | 20.72% |
| City Property Tax | $4,607.758 | 7.06% |
| Local Sales Tax | $4,473.759 | 6.85% |
| County Property Tax | $4,462.844 | 6.84% |
| Special District Property Tax | $3,369.069 | 5.16% |
| TOTAL | $65,285.672* | 100.0%* |
| (* May not add due to rounding.) | ||
Again, when the school finance reform legislation of 2006 takes full effect, these numbers and percentages will change. But the point is clear: to combine property tax for education (which is, in part, a state function) with truly local property tax revenues presents an extremely misleading picture.
Finally, irrespective of the absolute dollar amounts, the fact remains that in Texas the state/local tax burden, expressed as a percent of income, is 9.4 percent, which (according to the Tax Foundation) ranks 45th in the nation.