Texas is flooded with extra cash—and Gov. Greg Abbott supports using at least some of it to reduce property taxes for Texans.
Thanks to the Texas Legislature’s fiscal stewardship and the Texas economy’s resilience, Texas governments have amassed major surpluses. Consider that tax collections are up 30.62% over this time last year, generating a budget surplus of between $12 billion and $15 billion next session. Texas is also anticipated to have up $15 billion dollars in its Economic Stabilization Fund (ESF), which is more commonly known as the rainy day fund.
Local independent school districts (ISDs) are also hording tax money. According to outgoing House Public Education Chairman Dan Huberty, school district fund balances rose to $21.5 billion last year. He commented, “it’s insane the amount of money [ISDs] are putting in their bank accounts.” To be fair, ISDs need to save some funds for emergencies. But even after subtracting the TEA-recommended 110 days of operating expenses out of the balance, ISDs still have up to $6.6 billion in excess savings.
All of this money comes from Texans, yet it is being used to benefit no one. According to WalletHub, Texas ranks an abysmal 45th on property taxes, surpassed only by Wisconsin, Vermont, Connecticut, New Hampshire, Illinois, and New Jersey. The average Texan paid over $3,000 in property taxes in 2019, a number that has surely gone up.
Homeowners across the state are finding their homes harder and harder to afford, especially as out-of-control appraisal districts spike home valuations to historic highs. These property tax increases do not just affect business owners. Rising property taxes have also caused a spike in rents across Texas.
Texans need property tax relief, and they need it yesterday. This isn’t a question of procedure, or complex tax laws, or of reining in appraisal districts. Those are all questions that need to be addressed, but they must be addressed by the Legislature in 2023. Immediate tax relief is possible, straightforward, and necessary: use surplus monies accrued by state and local governments to buy down property taxes.
State lawmakers have proved, time-and-again, that they can exercise fiscal discipline. They can do so again in 2023 by ignoring the temptation to spend the surplus to grow government, and instead, commit at least 90% of the surplus to tax relief. If the surplus stands at $15 billion, that would mean providing $13.5 billion in tax relief. Combined with other sources, like the ESF and ISD fund balances, Texas could have as much as $20 to $25 billion to return to taxpayers. This would provide enormous relief.
Opponents say they’re worried about an economic downturn, and thus a reduction in tax revenues and a smaller rainy day fund. Thanks to the tireless efforts of the Biden Administration to increase inflation, sink the economy, and mishandle federal funds, a recession is entirely possible. However, in an economic downturn, it is more important than ever that people keep as many of their hard-earned dollars as possible. By returning excess savings to the taxpayers, Texas would ensure that the average Texan has more money in their pockets, which gives families a needed buffer. Thus, it is actually in the government’s best interests to return money to taxpayers so that they can use it to inject vitality into the economy
Rapidly rising property taxes are a threat to all Texans. If left unchecked, they will drive many out of house and home. If a downturn does occur, those driven out by property taxes will be hit even harder. It is in everyone’s best interests for the state to provide relief for property taxes. Gov. Abbott supports using the state surplus to reduce property taxes at the state level. But local taxing entities can act now.