News/Interview: LOCAL NEWS Here are the 2 philosophies to reduce property taxes behind the standoff between Gov. Greg Abbott, Lt. Gov. Dan Patrick
Larry and Glenda Legler think the state should be using much of its nearly $33 billion surplus to give Texans a break on their property taxes.
Larry Legler said, "The state's got an ungodly amount of money that they need to do something with."
But after months of promises to do that, Republican leaders still can't agree on the way to provide relief. "That's what's getting frustrating."
Governor Greg Abbott prefers ending the school maintenance and operations or "M&O" portion of your property taxes over ten years.
That portion alone is about 42% of your property tax bill.
To make that happen, the state would shift sales tax, other state revenues, and surplus money to pay for public schools.
That would allow the state to gradually reduce the rate for M&O property taxes until they're eliminated altogether.
Vance Ginn, a conservative economist and president of Ginn Economic Consulting, has pushed this idea for years. "It's the only way that you can get to $0 school district property taxes is by buying down those rates because that rate can go to zero which zero out of a hundred-dollar valuation for a home is $0. And so that is still $0, and you've eliminated that tax."
But Lt. Gov. Dan Patrick and the Texas Senate have a different plan.
While it uses more state revenues and less property taxes to pay for schools, it would also increase homestead exemptions for most homeowners from $40,000 to $100,000.
And for homeowners over 65, it would raise homestead exemptions from $70,000 to $110,000.
Patrick said it would provide nearly double the savings for homeowners than the Governor's plan.
CBS News Texas asked Patrick earlier this week if he doesn't support eliminating the school property tax.
He said, "You can't get there. You only have sales tax to prop up a state of 30 to 35 to 40 million people the next decade. What happens when we have a decline and sales taxes go down? You'll have no money to pay your bills. You can't be a one-legged horse."
Ginn disagreed. "The Comptroller said we're going to have about $27 billion in the rainy-day Fund. The rainy-day fund is there to cover unforeseen revenue shortfalls which would be exactly this sort of situation."
Abbott said 30 business and other groups support his plan.
The Leglers said because they're seniors, they prefer the plan from Patrick and the Senate. "Everything's gone sky high and when people can't get the medications they need, which is not our case, but many people we know, or they can't afford groceries, a loaf of bread at the grocery store, we got a problem."
Both the House and Senate have approved different legislation, and until they pass the same bill, the Governor cannot sign it into law.
Abbott will speak Friday about this, and other issues related to the regular and special legislative sessions.
Originally published by CBS Texas.
State leaders promised “historic” property tax relief this session, but though it is near the finish line, it will not make it past the checkered tape before the body adjourns sine die on Monday.
Last summer, Gov. Greg Abbott called on the Legislature to appropriate “at least half” of the then-$27 billion projected budget surplus to provide “the largest property tax cut ever in the history of Texas.” The comptroller’s January Biennial Revenue Estimate increased that total to $32.7 billion in the state treasury and $27 billion in the Economic Stabilization Fund, also known as the state’s savings account.
That’s a lot of tax dollars to disburse, and number one on Abbott’s list was property taxes — which was also high on the list of both chambers.
But after a lengthy, attention-grabbing impeachment proceeding against Attorney General Ken Paxton on Saturday afternoon, the clock ticked on toward the midnight deadline to distribute the conference committee report for the last-remaining property tax proposal.
And then, some Sunday evening scrambling on a last-minute deal turned out to be more smoke than fire — the House conferees announced the signing of a deal last night, and posted a picture of them waiting for the Senate’s conferees to come sign it, but that ultimately did not happen. Details of that blueprint have not been disclosed as both sides have kept their cards close to their chest.
The Texan can confirm that plan included the $12 billion for rate compression, a $70,000 standard homestead exemption, a $100,000 elderly and disabled homestead exemption, and a 7.5 percent appraisal cap on all real property.
After a hastily convened meeting with Lt. Gov. Dan Patrick and Abbott, Speaker Dade Phelan (R-Beaumont) made a beeline for the House dais and adjourned the body until Monday morning with no deal announced on marquee property tax relief.
Discussions continued into Monday morning but no deal was struck — appraisal caps being the point of insurmountable disagreement. Abbott tacitly weighed into the debate, gesturing at putting rate compression above all else, but it did little to move the needle one way or the other.
The Texas House passed a revamped version of Senate Bill (SB) 3 on May 19 — a plan that included $12 billion for new rate compression and the 5 percent appraisal cap on all property from its original plan. But it also included a $100,000 homestead exemption, double what the Senate included in its proposal.
Ultimately, the two sides could not coalesce on a compromise; the House dug its heels in for an appraisal cap reduction and extension, while the Senate dug its heels in against it. The ramped-up homestead exemption was not enough to entice the upper chamber to swallow the appraisal cap pill. Lt. Gov. Dan Patrick has maintained it to be a total non-starter in the upper chamber.
As passed by the House, SB 3 would have amounted to $16.3 billion in property tax curtailment, plus the $5.3 billion already in the budget to maintain previous levels of compression.
Because of this stalemate, and the emphasis Abbott has placed on it, property tax relief is sure to be on the list of issues for the coming special session — expected, but not yet confirmed, to start Tuesday. Property tax relief was on the governor’s list of emergency items at the beginning of the session.
Even with the appraisal reform stalemate, there is a starting point of common ground between the chambers. The 2024-2025 state budget, approved by both chambers over the weekend, earmarks $17.3 billion for rate compression — $5.3 billion to maintain previous levels and $12 billion to add to it.
The budget has no line item for homestead exemption increases and the appraisal cap extension would not require any financial injection. When the two bodies reconvene, it’s unclear how this stalemate could be resolved other than both just throwing up their hands and moving forward only with the rate compression — the aspect they both agree on.
The previous record for the largest property tax cut is $14 billion in the mid-2000s. Both chambers of the Legislature have said their plans surpass that line — including the $5.3 billion to maintain current levels.
Critics of that claim — such as Vance Ginn, former chief economist for the Texas Public Policy Foundation — have set the line at $20 billion in today’s dollars accounting for inflation, and also say that the entire sum of dollars going toward property tax relief should be allocated to compression.
On top of this, add in the fact that to maintain levels of compression next biennium, the state will have to allocate the same amount of money toward it. Otherwise, tax bills will jump.
Before the House adjourned sine die, Lt. Gov. Dan Patrick issued a letter asking for Abbott to include the Senate’s property tax plan — a $70,000 standard homestead exemption, $30,000 elderly and disabled homestead exemption, a $25,000 business personal property tax exemption, and a business inventory tax credit — among a litany of other priorities.
Despite the appraisal stalemate running out the clock on this session, the Legislature will quickly have another go at the issue and the chance to fulfill the promises made before and during the 88th regular session.
Originally published by The Texan.
In Texas, widely viewed as one of the reddest states in the nation, conservatives are working hard to get a large property tax relief package, an education savings account (ESA) program, and other landmark reforms to Governor Greg Abbott’s (R) desk before the state legislature adjourns its 88th regular session on May 30.
Governor Abbott has made school choice a top priority this year, barnstorming the state for months and speaking at numerous events in favor of providing Texas families with school choice, something that parents and children have in a growing number of states. Since the beginning of 2021, legislatures in ten states have enacted or expanded ESA programs. When Governor Ron DeSantis (R) signed legislation in March to provide universal access to ESAs in Florida, it was the fourth state to enact legislation in 2023 making ESAs available to children.
Recent polling continues to show strong public support for ESAs in Texas. Anew University of Texas-Austin Texas Politics Project poll, like many previous polls, found strong bipartisan backing for ESAs among Texas voters. That poll, which was conducted in April, found 60% of Texas voters overall support the creation of an ESA program, including 75% of Republicans surveyed and 46% of Democrats. The UT-Austin poll also found majorities of black (64%) and hispanic (56%) voters support the enactment of an ESA program in Texas.
Since Lt. Governor Dan Patrick (R) passed an ESA bill, Senate Bill 8, out of the Texas Senate on April 6, those pushing for school choice in Texas have been focused on the House. Legislators know they likely face a special session this summer if significant property tax relief and a bill that expands school choice in a meaningful way is not enacted before the regular session ends.
Bills Conservatives Want To Fail
While school choice is one of the top reforms that conservatives would like to see Texas lawmakers send to Governor Abbott this month, there are other pending bills that many conservatives and free market oriented legislators would like to see voted down or allowed to die. One such proposal that is viewed as a legislative threat by conservatives is House Bill 4602/Senate Bill 1498, legislation that would raise taxes on Texans who lend their personal vehicle out through a car sharing platform. Such platforms are relatively new, but they’ve proven popular because they expand consumer options while providing people with a new source of income. These platforms have been described by some as “AirBnB, but for personal vehicles instead of personal homes.”
HB 4602/SB 1498 is part of a multi-state campaign by rental car company lobbyists who are seeking to impose higher taxes on a competitor. Rental car company representatives claim that they are at a disadvantage since they must collect and remit rental car excises taxes, while car sharing hosts do not.
Yet car sharing platforms, car sharing hosts, and other opponents of HB 4602/SB 1498 point out that the playing field is already uneven, with rental car companies currently possessing their own tax advantage relative to car sharing platforms. That’s because rental car companies do not pay sales tax on the vehicles that they rent out, whereas Texans who rent out their cars through an online platform have paid sales tax on their vehicle.
Critics of HB 4602/SB 1498 contend that it would further exacerbate an unlevel tax framework in favor of rental car companies at the expense of Texans. Unlike rental car companies, Texans who earn income through peer-to-peer car sharing services pay a motor vehicle sales tax. Rental car companies, meanwhile, collect gross rental receipts tax from their customers instead of paying the motor vehicle sales tax.
HB 4602/SB 1498 would force Texans to remit three taxes (the motor vehicle sales tax, gross rental receipts tax, and a local stadium tax). Rental car companies, meanwhile, only have to remit two of those taxes. Opponents of HB 4602/SB 1498 point out that the majority of peer-to-peer car sharing customers (or guests) in the state are Texas residents in need of a vehicle for in-state trips. Texas residents who would be adversely affected by HB 4602/SB 1498 already help pay for local stadiums through property taxes and general sales tax payments. Rental car company lobbyists insist they’re seeking tax parity with car sharing platforms, but critics view this proposal as bad policy that would further tilt the playing field in favor of rental car companies to the detriment of many Texans.
Another bill still pending in Austin that conservatives would like to see go down this month is House Bill 3395, legislation that would prohibit credit card interchange fees from applying to the tax portion of a transaction. In April, a coalition of conservative organizations sent a joint letter to Texas legislators urging opposition to HB 3395, stating that if this bill is enacted, state government “would be interfering in the free market in an attempt to control who bears the burden of collecting and remitting sales tax – risking higher costs for Texans in a time of out-of-control inflation.”
“Like every government attempt to control the market, there will be unintended consequences,” the April joint letter added. “By drastically increasing the amount of transactions processed, forcing processors to create new systems, software, and even new equipment, costs for small businesses and consumers in Texas would rise.”
California-Style Committee Proposed In TexasWhile heavy handed regulations like plastic bag bans and taxes are typically associated with blue states like California, they can still pop up in red states. Take House Bill 3210, legislation now pending in the Texas House of Representatives that aims to “address the proliferation of carryout bags” and “reduce a source of litter on the landscape.”
HB 3210 seeks to accomplish this mission through the creation of a new committee that will “develop and implement a statewide litter program to comprehensively address litter prevention and reduction.” The committee created by HB 3210 will also “evaluate existing state laws, and any administrative rules related to those laws, that address litter.”
Concerns that the committee created by HB 3210 could have negative unintended consequences were voiced at the April 20 hearing on the bill.
“This committee, as proposed, should be given the ability to assist recyclers collect and process the targeted items in a cost effective manner,” said Bryan Wallace, an Alvin resident, in testimony presented to the April committee hearing on HB 3210.
“However,” Wallace added, “If the goal of this committee becomes that of an enforcement agency with a punitive culture toward businesses, then I would be very opposed to using public funds to build such an organization.”
The Manhattan Institute’s Brian Riedl has written about how “leading progressive bills make utopian promises of huge new benefits and then assign a commission or agency to figure out how to make it all work.” Enactment of HB 3210 would have Texas taking a similar approach.
In addition to these bills that Texas conservatives would like to see defeated, there are many who believe that Republicans in both the state House and Senate are proposing to spend too much. One of those is Vance Ginn, Ph.D., an economist who has worked on public policy in Texas for a decade where he helped create the Conservative Texas Budget approach and is now a senior fellow at Americans for Tax Reform. Ginn says the current spending levels that have been proposed by both the House and Senate are too high.
“The Senate and House passed two-year budgets that substantially increase from what was appropriated last session to totals of more than $300 billion,” says Ginn. “These irresponsible budgets spend too much and provide too little in new property tax relief.”
“The amount of new property tax relief should be about $20 billion to be the ‘record relief’ desired by state leadership to account for inflation since the $14.2 billion in property tax relief in 2008-09,” Ginn adds. “Texas must remain competitive and not sit back on its laurels as other states are passing responsible budgets, providing substantial tax relief, and creating universal ESAs. But time is running out quickly.”
While Texas conservatives are playing offense in trying to enact property tax relief and expand school choice, it’s clear they still see many legislative threats looming in the final weeks of session in Austin. If House and Senate leaders are unable to get top priorities to Governor Abbott’s desk this month, however, there is a good chance they’ll have to return to Austin this summer to address unfinished business in a special session.
Originally posted at Forbes.
With weeks left in the Texas Legislature’s 88th regular session, state lawmakers are working to enact the largest tax cut in the history of the nation’s second most populous state. In addition to billions of dollars worth of property tax relief, state legislators are moving to enact a number of innovative reforms before adjourning. Texas should unite to push these measures across the finish line.
Gov. Greg Abbott and leadership in the Texas House and Senate all want to pass a massive property tax relief bill but differ over the best approach. The Senate would like to raise the homestead exemption. The House, however, would rather cut the appraisal cap in half, taking it from 10% to 5%, and put more money toward rate compression than is called for by the Senate plan. Disagreements over these key details threaten to squelch planned relief. Lawmakers should work out a deal before the session ends.
“Texas has a historic opportunity to provide much-needed property tax relief with nearly $33 billion in surplus for the current biennium plus extra taxpayer money available in the upcoming biennium, which should be returned to taxpayers,” noted Texas-based economist Vance Ginn, a senior fellow at Americans for Tax Reform.
In addition to reducing property tax payments in a state that is home to the nation’s sixth highest average property tax burden, Texas lawmakers are also taking action to reduce regulatory costs. The House passed House Bill 2127 by a 92-55 vote on April 19. HB 2127, introduced by Rep. Dustin Burrows, R-Lubbock, and Sen. Brandon Creighton, R-Conroe, prohibits local governments from regulating products, activities, or industries in a manner that exceeds or conflicts with state law.
Proponents of HB 2127, such as the National Federation of Independent Business, which represents small businesses, say it will rectify the patchwork of regulations that currently exist in Texas, which is making it more difficult for a business to operate and create jobs.
“There are dozens of reasons why Texas is the best state in the country for business, but its convoluted, unpredictable, and inconsistent patchwork regulatory system is not one of them,” said James Quintero, policy director at the Texas Public Policy Foundation. Quintero says HB 2127 “brings some much-needed common sense to the system, unifying the rules for conducting business in a predictable, reliable, and efficient way to promote compliance.”
Lastly, Texas lawmakers have the opportunity to make Texas the first state to ban taxpayer-funded lobbying by enacting Senate Bill 175. SB 175, introduced by Sen. Mayes Middleton, R-Galveston, would bar local governments and other political subdivisions from using taxpayer funds to hire contract lobbyists.
Supporters of SB 175 note that contract lobbyists hired with taxpayer dollars frequently work against the interests of taxpayers. In previous sessions, for example, taxpayer-funded lobbyists have worked to kill property tax relief and block reforms that would have government spending grow at a more sustainable clip. This resistance to conservative priorities continues to this day, with taxpayer dollars currently being spent to lobby against Education Savings Accounts.
That is why many view SB 175 as a root reform that will beget many other pro-growth reforms. Proponents of SB 175 believe it will help facilitate the future passage of tax relief, ESAs, greater spending restraint, and other pro-taxpayer reforms.
As we saw with the criminal justice reform movement that started in Texas and has since swept the nation, enactment of a given reform in Texas makes it easier to pass that same proposal in other states. That’s because lawmakers in many state capitals look to Texas as a model for sound governance. As such, while passage of the aforementioned reforms would benefit Texans, their enactment will also have a positive effect nationally.
Hopefully Texas lawmakers can capitalize on these opportunities before them in the remaining weeks of session and send these groundbreaking reforms to the desk of Abbott, who has made clear he wants to sign them.
Grover Norquist is president of Americans for Tax Reform. He wrote this for The Dallas Morning News.
Originally published at Dallas Morning News.
ATR Senior Fellow Vance Ginn provided remarks at the Tax Day press conference at the House Triangle. Video of Ginn’s remarks can be viewed here.
“It is often said that we don’t have a revenue problem, we have a spending problem. And that’s true. But also here on Tax Day, we have a tax problem.
What we really need is for free market capitalism, which is the best path to let people prosper, to be able to flourish again. For people to get jobs and higher wages so they could pay for the higher inflation that’s come out of the Biden administration.
And it’s just one thing after another. The latest account of this was the Inflation Reduction Act which does no such thing. It continues to raise inflation, raises the debt, and the latest estimates on this show that it will be about four times higher than what the CBO reported just last year.
And a lot of this has to do with the tax credits for electric vehicle batteries, which are going to cost nearly $200 billion plus over time. This is another way that they’re infiltrating the overall size of the government through our economy throughout our lives.
And fortunately, we have another way that we should go, that’s led by a lot of states that are leading the sustainable state budgets across the nation, that they should look at by spending less, and finding ways to provide tax relief and regulatory reform.“
Originally published Americans for Tax Reform.
Vance Ginn, Ph.D.