Texas is one of seven states that doesn’t levy a personal income tax. And while Texas’ overall state and local tax burden is considered relatively light, putting Texas 15th on the Tax Foundation’s 2019 State Business Tax Climate Index, the Lone Star State’s property tax ranking is 37th, meaning that 36 other states have a smaller relative property tax burden than does Texas.
Local property tax collections in Texas increased 70% from 2007 to 2017, to a total of $59.4 billion. By comparison, state revenue from all sources, except federal transfers, was up 38%, to $72.8 billion.
During the same time, the state’s population grew by 18.8%, while there was inflation of 18% over the period. Shockingly, property tax collections grew about 89% faster than the yardstick of population and inflation, while state revenues were right in line with what would fund government at a constant level.
Homeowners see their property tax bills increase without regard to their ability to pay them. In Texas, property values aren’t determined by the specific sales price of a property, as they are in other states (most notably California). Instead, government officials assess property values, while elected officials in some 4,200 local government agencies determine property tax rates. This system has led to a growing frustration by the general public that property taxes are out of control.
This has led to several proposals before the Texas Legislature in its 2019 session to reform or place some limits on property tax increases.
One such measure is Senate Bill 2, by Sen. Paul Bettencourt (R-Harris County), which would make it easier for citizens to roll back rapidly increasing property taxes at the ballot box.
While the Bettencourt bill isn’t a property tax “cap” as it’s been characterized by some critics—it’s merely a trigger, allowing voters to have final approval on how high and how fast they’re willing to let their property taxes rise—you’d be hard-pressed to think it wasn’t the end of the world for local government. This, after 29 people testified against the bill at a recent hearing.
Interestingly, not one of the individuals who testified against giving the people more power over their taxes represented average homeowners—all 29 were lobbyists, local government bureaucrats or local elected officials.
Some claimed that public safety would be shortchanged if SB 2 passes. This argument doesn’t hold up under the facts. From 2007 to 2017, property taxes collected by cities and counties in Texas rose by about 55%, to $19.3 billion. At the same time, spending on local law enforcement, jails, and fire personnel was up 44%, far above what was needed to simply keep up with Texas’ growth and inflation. Local spending on things other than public safety payrolls was up by almost 62%. This means that public safety can be appropriately funded if local officials properly prioritize spending.
The nature of the crowd who traveled to Austin to testify against SB 2 raises an important concern. Ethics filings from the 2017 Texas legislative session indicated that about $41 million of taxpayer money was spent by local government to hire lobbyists. These lobbyists, virtually without exception, were hired with tax money to advocate against the interests of average taxpayers.
In other words, they used taxpayer dollars to lobby for higher taxes, bigger government, and more regulations. Furthermore, the $41 million reported doesn’t include government employees whose job it is to lobby state government. For instance, the city of Austin spends about $1 million of tax money annually to lobby, employing some 14 city staff and contract lobbyists to try to influence legislation.
The practice has drawn widespread condemnation, with Texas Gov. Greg Abbott in December notably calling out the city of Tyler for intending to spend $200,000 on lobbyists in 2019.
This practice has led lawmakers to file at least two bills to curtail taxpayer-funded lobbying (SB 82 by Sen. Bob Hall and HB 281 by Rep. Mayes Middleton) and three bills to make the practice more transparent (SB 702 and SB 703 by Sen. Paul Bettencourt and HB 433 by Rep. Matt Shaheen).
Critics of these measures say that they stifle local government’s ability to speak with the state legislature. But state lawmakers have every incentive to communicate with the local elected officials in their district—if nothing else, due to self-preservation, as electoral challenges most frequently arise from the ranks of local officials. In addition, the right to free speech, as set out in the First Amendment, is an individual right, not a governmental right. Only people have rights—governments have powers.
Lastly, the Texas Public Policy Foundation hired WPA, a well-known national polling firm, to survey 800 registered Texas voters in mid-December, asking them what they thought about the practice of taxpayer-funded lobbying. The results were overwhelming: 91 percent opposed the practice, including 80 percent who strongly opposed it. The people understand that it’s wrong to ask them to pay their tax dollars to lobbyists, who then work to increase taxes and the size of government.