Real Property Tax Relief and the Problem with Arbitrary Starting Points 

The Texas Senate debated S.B. 1 (the Senate’s revenue cap legislation) on the floor last week.  Several senators rightfully raised the point that, if the legislature is really serious about providing property tax relief, it should direct its attention to fixing the way the state funds public education. 

In response, the author of S.B. 1 repeatedly stated that school property taxes have only increased 39.5 percent from 2005 to 2015, while city property taxes have increased by 71 percent over the same period. (County and special purpose district property taxes increased by 82 percent and 93 percent, respectively, over the same time period.)  He used this chart to support his claim. 

So that pretty much settles it, right? The way to provide real property tax relief is to impose restrictions on cities and counties instead of addressing the largest portion of every homeowner’s property tax bill? Well…not exactly.

What’s interesting about the numbers cited by the author of S.B. 1 is that he begins measuring the increase in property taxes in 2005. Conveniently for him, 2005 was the year before the legislature significantly overhauled school finance by revamping the state franchise tax to fund public education. This opened the door for local school districts to lower their maintenance and operations tax rates. In 2006, school property taxes dropped significantly because of action taken by the legislature. To include this artificial and anomalous drop in school tax levy in the comparison to city property tax levies over the same time period significantly skews the numbers.  Doing so makes it appear as though city taxes were and are increasing at a much faster rate.

Using a more appropriate comparison of property tax levies from 2007 to 2015 paints a very different picture. During that time frame, school district property taxes increased by 49 percent, and city property taxes increased by 42 percent. Instead of city property taxes increasing by nearly double the amount of school property taxes, an “apples to apples” comparison shows that school district property taxes have increased faster than city property taxes. 

School district property taxes are increasing faster than city property taxes on a percentage basis.  But looking at real dollar amounts, as opposed to percentages, makes the increase in school district property taxes compared to city property taxes even more apparent.

In real taxpayer dollars, the 49 percent increase in school district property taxes from 2007 to 2015 collectively cost Texas taxpayers $9.3 billion. The 42 percent increase in total city property tax levies from 2007 to 2015 cost Texas taxpayers $2.9 billion. In real dollar figures, school district property taxes have increased over three times as much city property taxes.

Legislators continue to point the finger at cities and counties for increased property taxes. But until the legislature fixes the problem it has created regarding funding public schools, Texas taxpayers will not see one bit of tax relief. 

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League. 

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