After humming under the surface of conservative politics for nearly three decades, a bold question has emerged front and center in this year’s legislative tax cut debate: Can Texas eliminate school property taxes altogether?
Legislative leaders plan to spend at least $12.3 billion on new property tax cuts, no matter what plan they eventually agree upon. A massive state $32.7 billion surplus this year will allow them to do that while still growing per-student funding over the next two years. But worries persist about whether the strategy of slowly shrinking school property taxes — or phasing them out entirely — will bleed school districts dry in the long-term.
To address that inequity, the state has sent extra money from the "property rich" districts to the "property poor" ones, a system derided as "Robin Hood" by critics. To cut down on property tax bills, the state has pumped in more money from taxes it collects to offset some of those differences — a process called "compression."— in large part because there’s no state income tax to help fund schools.
In 2019, state leaders tried to tackle the issue again. Abbott, Patrick and then-House Speaker Dennis Bonnen proposed increasing the state sales tax by 1 percentage point and using that revenue to buy down school property taxes. That proposal, like Heflin’s more than 20 years earlier, failed to pick up sufficient support.
Without the limits the Legislature placed on tax revenue growth in 2019 and an accompanying buy-down at the time, tax bills would be much higher. But in a rapid property-value-growth scenario, that relief is harder to feel. Pressure to address property taxes in a more noticeable way, along with the need for a few other updates to the 2019 plan, are likely "what led us to where we are today," Pruneda said.
But cutting taxes has proven to be more difficult than expected, thanks to fighting between the House and Senate. The Republican leaders agreed on how much to spend on tax cuts, but wrapped up the regular session without settling on how. They have remained at odds ever since Abbott called them back for an immediate special session, bickering over Twitter and calling each other out in interviews.