Texas Gov. Greg Abbott signaled that major property tax changes may be on the horizon. During last week’s televised debate, the governor outlined where he’d like to see Texas tax policy go, saying: “My goal is to eliminate the school property taxes imposed in the state of Texas so that people can genuinely own their own home without being taxed out of it.”
The announcement comes as welcome news. Over the last 10 months, property values have skyrocketed, tax bills have soared, and many major metros are now deemed to be unaffordable. In other words, it’s been a difficult time to rent or own property in Texas, especially in and around large cities.
It’s not an understatement to say that the situation today is untenable. High and fast-growing tax bills set against the backdrop of a flailing national economy and rampant inflation threaten dire consequences. It’s obvious that we need a new, better direction when it comes to taxation, which brings us back around to the governor’s statement.
While he has yet to release any plan details, one possible approach the governor might consider, assuming re-election, is to prompt the Legislature to use state surplus and savings to permanently compress the school district maintenance and operations (M&O) tax in the 2023 session and moving forward. Let’s remember that state lawmakers will have several large pots of money to draw from for tax relief purposes, including an estimated $27 billion surplus, a $13.6 billion balance in the Economic Stabilization Fund, and several billion in uncommitted fund balance money held by Texas school districts. Together, these tens of billions could jumpstart the governor’s proposal to eventually eliminate school property taxes—forever.
If Texas policymakers can successfully move in this direction, then it’ll mean big-time tax relief, it’ll put to use “extra” tax dollars in a responsible way, and it’ll put us on the path to ending Robin Hood, just as we’ve written in greater detail here.
This is the right way to take Texas tax policy. It’s time for M&O to go.