Several bills filed ahead of legislative session to reduce Texas property taxes

Multiple bills have been filed by state lawmakers ahead of the 88th legislative session, which begins in January, to attempt to reduce property taxes.

Homeowners in Texas currently pay the sixth-highest property taxes in the U.S., with many seeing double digit increases in their bills in one year.

Reducing property taxes is a top priority of the Texas Republican Party. Republican Gov. Greg Abbott, who was reelected to his third term, has pledged to return half of Texas’ $27 billion surplus to taxpayers.

The state’s record surplus has contributed an historic amount to the state’s Rainy Day Fund, which is expected to reach $13.6 billion by the end of fiscal year 2023, according to the state comptroller’s office.

One approach is to reform the appraisal process.

State Sen. Louis Kolkhorst and state Rep. Cody Vasut filed bills to limit how much the appraised value of a residential homestead’s ad valorem tax can be increased. Kolkhort’s SB 152 and Vasut’s HB 145 would cap appraisal increases at 5% and 3.5%, respectively, down from 10% year over year.

Kolkhorst also filed SB 178, which would limit the “increases in the appraised value of real property other than a residence homestead for ad valorem tax purposes,” according to the bill summary.

Another approach is to use the surplus to pay down school maintenance and operation (M&O) taxes, a plan the Texas Public Policy Foundation proposed ahead of the last legislative session. M&O taxes, TPPF argues, have become a de facto statewide property tax. Reducing them will give taxpayers relief and also comply with the constitutional requirement to fund public schools, it argues.

The plan’s author, Vance Ginn, Ph.D., now founder and president of Ginn Economic Consulting and senior fellow at TPPF, said it would “prevent year-to-year spikes in tax bills and rein in irresponsible local governments.”

Reducing, and eventually eliminating, M&O taxes is “not about defunding education,” he emphasizes, but about providing property tax relief while also fully funding public education.

Texans for Fiscal Responsibility also proposed a Texas Prosperity Plan, which also proposes using budget surpluses to pay down and eliminate the M&O tax.

At least four lawmakers have filed bills to reduce the M&O taxes.

State Rep. Tom Oliverson filed HB 174, which proposes allocating and depositing a certain amount of the surplus state revenue into a property tax relief fund to reduce M&O taxes. State Rep. Matt Shaheen and Rep.-elect Ellen Troxclair filed HB 629 and HB 612, respectively, to reduce M&O taxes by using 90% of surplus state revenue.

State Rep. Andrew Murr filed HB 29 to eliminate M&O taxes and to create a joint interim committee to address their elimination. In the last legislative session, Murr introduced HB 91 to create a committee to study a new tax model.

State Rep. Steve Toth filed HB 268 to repeal or limit certain state and local taxes, including M&O taxes. It also proposes creating new state and local value-added taxes (VAT), as well as implementing school finance reform.

“Texans will never experience the peace of mind that comes with owning their home until property taxes are eliminated," Ginn argues. "Until then, Texans are simply renting their home from the government, always with the fear that taxes could become so exorbitant they can no longer afford to stay.”

Texans for Fiscal Responsibility’s president, Tim Hardin, told The Center Square that property taxes have gone up nearly 200% in the last 20 years “with no sign of stopping.” The “historic property tax reform” touted during the 2019 legislative session “has resulted in no tax relief for anyone,” he said.

While his organization supports property tax reduction, it also advocates for reduced spending.

“Our tax problems can be solved the same way that we have to solve our personal budgets: cut spending. Not slow the rate of growth of spending,” Hardin said, but “actually cut spending and reduce the size of government.

“We are literally drowning in surplus dollars and the legislature is already looking for ways to use that to grow government. Texans must demand our money back in the form of property tax relief and a significant reduction in the size of our government.”

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