Texas should be leading in fiscal conservatism. Unfortunately, this hasn't been the case in recent years. The result has been excessive taxes at the state and local levels. There are paths to reducing the budget, providing universal school choice, and putting property taxes on a path to elimination. These paths won't be easy or likely politically possible, but with bold leadership and grassroots help, Texas can lead again! I've tried to provide this in the presentation below with sources for all information. Check it out! Your browser does not support viewing this document. Click here to download the document.
0 Comments
Testimony Before the Texas House Committee on Ways and Means for HB 8 for Property Tax Compression3/3/2025 Thank you for the opportunity to submit testimony supporting HB 8, with a few additional changes needed to make it long-lasting relief. I am Dr. Vance Ginn, president of Ginn Economic Consulting and contributor to more than 20 think tanks, including Texans for Fiscal Responsibility. I appreciate the chance to write on the urgent need for property tax relief, which should include a clear path to eliminating school district maintenance and operations (M&O) property taxes—the largest portion of Texans’ property tax bills. Despite claims of historic tax cuts, Texans continue to see rising property taxes because state and local governments refuse to control excessive spending. In the last session, the Legislature allocated $12.7 billion in new property tax relief, yet property tax bills still increased across the state. Much of this so-called relief was tied up in raising the homestead exemption from $40,000 to $100,000 rather than focusing on tax rate compression, and local governments continued hiking tax levies. This was not the largest tax cut in Texas history—property taxes didn’t go down; they went up. Texans will never see meaningful, lasting relief until lawmakers address reckless spending and local tax hikes. Even after SB 2 was passed in 2019 to limit property tax growth, loopholes have allowed local governments to continue raising taxes without real accountability. These loopholes must be closed, and spending must be controlled to ensure taxpayers get the promised relief. The only way to achieve meaningful property tax reduction is to aggressively compress school district M&O tax rates while requiring local governments to lower their property tax rates instead of shifting the burden elsewhere. Texas has a $24 billion surplus of overcollected taxpayer money and $28 billion in the Rainy Day Fund, yet much of it is being hoarded instead of used for tax relief. These funds should be returned to taxpayers by eliminating school district M&O property taxes. If this money isn’t used for permanent property tax reduction, it will only encourage more government growth, making tax cuts even more challenging in the future. The problem is not a lack of funding—it is out-of-control spending. Since 1996, property taxes have grown at an average rate of 6.1 percent per year, far exceeding the rate of population growth and inflation. Texans now pay more than $50,000 per student in total school-related costs, which includes maintenance and operations, debt, and unfunded teacher pension liabilities, yet student performance has declined. Per-student spending of more than $15,00 annually has increased 48 percent since 2011, while eighth-grade math proficiency has dropped by 40 percent. The state cannot continue pouring more money into an inefficient government school monopoly and expect better results. The best way to lower property taxes is to spend less and compress tax rates, using state funds to buy down school district M&O tax rates until they reach zero. Governor Greg Abbott has called for at least $10 billion in property tax relief, yet HB 8 only provides $2.8 billion in new compression. The other $3 billion proposed for compression is in HB 1, the budget, because of HB 3 in 2019. These actions are insufficient to prevent local governments from undoing tax cuts through higher spending and other tax increases. The Legislature must ensure that local governments do not raise other taxes or debt as school district M&O rates are reduced. Texas must impose strict spending limits at the state and local levels to prevent excessive government growth. The most effective way to do this is by capping all spending at a maximum rate based on the prior three-year annual average of population growth plus inflation, as outlined by Americans for Tax Reform’s Sustainable Budget Project. This ensures that the government does not grow faster than the taxpayers’ ability to fund it. However, given recent spending excesses, Texas should go further and freeze the budget with zero growth or even implement spending cuts to ensure tax relief is maximized, as highlighted by Texans for Fiscal Responsibility. Other states are aggressively cutting taxes and putting income taxes on a path to elimination, meaning Texas cannot afford to sit back and assume it will always be the country's economic powerhouse. States like Louisiana, Iowa, and North Carolina have made structural changes to lower tax burdens, making their economies more competitive. If Texas continues growing government instead of cutting taxes, it risks losing its economic edge. The best way to remain a leader is to cut spending, eliminate school district M&O property taxes, and reject tax shifts that only move the burden around rather than reduce it. One tax shift that must be rejected is raising the homestead exemption. Lawmakers have already increased it to $100,000, yet property tax bills continue rising. This highlights that exemptions do not solve the problem—they only shift the tax burden onto renters, businesses, and other property owners. Instead of playing favorites with exemptions, the state should focus on eliminating school district M&O property taxes through compression, which benefits all taxpayers.
Additionally, the loopholes in SB 2 from 2019 must be closed to ensure that tax relief is real and long-lasting. Local governments have exploited these loopholes to continue raising taxes without voter approval. The Legislature should take the following steps to fix these issues:
Without these reforms, Texans will continue seeing their property tax bills rise no matter how much relief the state provides. Local governments have become too aggressive in raising taxes and spending without restraint, and unless these issues are addressed, they will continue exploiting technicalities to tax Texans more. Texas must commit to cutting state and local spending, compressing school district M&O property taxes until they are eliminated, and preventing local governments from shifting the tax burden elsewhere. This will provide permanent tax relief, keep Texas competitive, and ensure that families can afford to own their homes without fearing rising property taxes. Instead of expanding government, lawmakers should cut waste, eliminate fraud, and return money to taxpayers. Texas should not hoard billions in tax dollars while families struggle with rising costs. The state should also reduce severance taxes on oil and gas companies, ensuring that Texas remains the world's energy leader and that money stays in the pockets of those who earned it. Texans deserve real tax relief, not more political games. HB 8 must be strengthened to prevent local governments from undoing tax cuts, enforcing strict spending caps, and dedicating more surplus money to eliminating school property taxes. Now is the time to act and make Texas the best place to live, work, and raise a family. Vance Ginn, Ph.D., is president of Ginn Economic Consulting and a contributor to more than 20 think tanks, including Americans for Tax Reform and Texans for Fiscal Responsibility. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the first Trump White House's Office of Management and Budget. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get more of his research at vanceginn.com. Originally published with John Hendrickson at The Gazette.
Property taxes are crushing taxpayers nationwide, and Iowa is no exception. In the past two decades, Iowa’s property taxes have surged by more than 110%, with local governments collecting over $7 billion in Fiscal Year 2025 — a 7% increase from the previous year. This explosive growth far outpaces population growth and inflation, leaving taxpayers struggling to keep their homes and businesses, particularly those on fixed incomes. The root cause of these rising taxes isn’t increasing property values; it’s excessive government spending. Local governments have expanded their budgets without considering taxpayers’ ability to pay. This disconnect has created a scenario where property owners feel they are merely renting from the government, with the constant threat of being priced out of their homes. Gov. Kim Reynolds has set a high standard for fiscal discipline at the state level. Her leadership in cutting income taxes and tying state spending growth to population and inflation has strengthened Iowa’s economy and provided much-needed tax relief. But local governments aren’t following the same playbook. Without similar spending restraints, they continue to shift the tax burden onto property owners. The situation in Texas offers a cautionary example. The state allocated $12.7 billion in surplus funds to reduce school district maintenance and operations (M & O) property taxes. While this provided some relief, the benefits were undermined by excessive local government spending, loopholes in levy limits, and a reliance on raising the homestead exemption to $100,000 rather than reducing tax rates. Texans are still among the country's most heavily taxed property owners because structural spending issues remain unresolved. The lesson is clear: Temporary fixes like exemptions or one-time infusions of surplus funds will not solve the property tax crisis unless paired with strict spending controls. States like Utah and Colorado have shown that lasting relief is possible by focusing on spending discipline. Utah’s Truth-in-Taxation law requires local governments to hold public hearings and justify proposed tax increases, ensuring transparency and accountability. Colorado’s Taxpayer Bill of Rights (TABOR) limits budget growth to the combined rate of population and inflation, creating a sustainable framework for fiscal responsibility. Iowa needs bold reforms that address the spending side of the equation. Levy limits, such as a maximum of a 2% increase per year, must be imposed without loopholes or exemptions. More importantly, local government spending should reflect the successful approach taken at the state level under Reynolds. This ensures that taxpayers are not continually squeezed to fund bloated budgets. The rise in property taxes represents a fundamental failure to adhere to sound economic principles. Taxes should not outpace the private sector that funds them, and government spending should reflect taxpayers’ ability to pay. High property taxes discourage investment, suppress economic growth, and impose a recurring financial burden on property owners that functions as an unrealized capital gains tax. Iowa must prioritize spending limitations, transparency, and rate reductions to address this crisis. Aligning local government practices with the principles championed by Gov. Reynolds at the state level will ensure that property ownership is a source of stability and pride, not financial anxiety. Tax and spending are two sides of the same coin. If Iowa’s local governments continue their current trajectory, taxpayers will remain trapped in a cycle of rising property taxes. It’s time for local leaders to follow Gov. Reynolds’ example and embrace fiscal discipline to create a fairer, more prosperous future for all Iowans. What happens when faith meets economics? In this episode of the Let People Prosper Show, Bill Peacock, a seasoned public policy expert, brings over 30 years of experience to the table. He shares how his Christian worldview shapes his approach to property rights, energy policy, and the Texas budget.
Bill dives into critical issues like the complexities of Texas property taxes, the challenges of conservative budgeting, and the future of energy policy in a state vital to the U.S. economy. This episode unpacks the foundational principles of freedom, accountability, and prosperity, making it a must-watch for anyone passionate about sound governance and free markets. Eliminating Property Taxes in Texas: Real Options for True Homeownership and Economic Prosperity12/11/2024
Originally published at Texans for Fiscal Responsibility. Property taxes are a financial burden that Texans can no longer afford to endure. Over the past 26 years, Figure 1 illustrates how property taxes have increased by an unsustainable 330%, far outpacing population and inflation growth of 136%. For Texans, this is not just an economic issue—it’s a question of fairness and freedom. Property taxes make homeowners perpetual renters, burden renters and businesses, and restrict economic opportunity. Despite six legislative attempts since 1997, Table 1 shows the structural problems driving property tax growth remain unaddressed and unresolved. Texans need bold, permanent solutions. Two pathways to finally eliminate property taxes include:
The Problem: Why Property Taxes Must Go Property taxes are burdensome in both design and execution. Figure 2 highlights how property taxes have increased fourfold since 1998. This unchecked growth has created severe economic distortions and eroded true homeownership. ![]() Uncontrolled Growth Since 1997, property taxes in Texas have exploded, growing faster than the population and inflation combined. Special districts led the way with an astronomical 576% increase, followed by cities (403%) and counties (402%), as shown in Figure 1. Figure 3 shows how property taxes increased by 6% on a compounded annual rate, which was 72% higher than the average Texan’s ability to afford them, as measured by the rate of population growth plus inflation. Property taxes affect all families who are homeowners, renters, and business owners, as noted in the Texas Comptroller’s 2023 report. Figure 4 from the Texas Comptroller’s Office shows that estimated school property taxes’ final incidence (i.e., burden) hits families across Texas. Source: Texas Comptroller’s Tax Exemptions and Tax Incidence Report
Homestead Exemptions: A Misguided Solution While well-intentioned, homestead exemptions, which exempt an amount from the appraised value for property taxes, are not the answer:
A Lack of Accountability Most local governments, except special purpose districts and some other small tax jurisdictions with a maximum of 8%, can raise property taxes by 3.5% on existing property (with no limitation on new property) without direct voter approval. With these loopholes in current law, county and city taxes increased by over 10% last year. This lack of oversight enables runaway spending and taxes. To address this, all property tax increases above 0% must require voter approval, with a 0% growth rate unless explicitly approved by the public. This means that as the County appraisal office does appraisals, the property tax rate determined by the local governing body must go down, so that the tax revenue (levy) collected doesn’t change from the prior period. This levy cap system makes appraisal caps or tax rate caps unnecessary, and the no-new-revenue rate is what the levy cap should be. The limitation must be on the levy collected from all property taxes, which a strong spending limit that covers spending from all revenue, including property taxes, sales taxes, and other revenues, should ultimately do. This would make it less relevant where the tax revenue comes from as the spending and, therefore, taxes are held in check and hopefully reduced. Pathway 1: Surplus-Driven Buydowns The surplus-driven buydown approach systematically reduces property taxes over time by dedicating state budget surpluses to lowering tax rates until they are zero. This gradual method ensures that essential services remain funded during the transition. How It Works
Scenarios of Surplus Buydowns to Eliminate Property Taxes
Pros of Surplus Buydown Method
A redesigned tax system in Texas would swap sales taxes for property taxes, preferably with a strong spending state and local spending limit and surplus buydown to reduce sales and other taxes. This approach depends on:
2. Adjust State and Local Sales Tax Base and Rates:
3. Ensure Spending Restraint, Transparency, and Accountability:
Pros of Tax System Redesign
Some suggest implementing a Value-Added Tax (VAT) instead of a broader sales tax to fund the property tax swap. This would be a mistake:
Texas must avoid adopting European-style tax systems that stifle economic freedom and growth. Recommendations for Legislators To ensure success, any plan to eliminate property taxes must include the following:
Texas must move beyond temporary fixes and fundamentally transform the state-local tax system. Whether through surplus-driven buydowns or a redesigned sales tax, the result will be a freer, fairer, and more prosperous state. Texans deserve true property ownership, economic opportunity, and a government that operates within its means.
Let’s end property taxes and empower Texans to prosper. The time to act is now. |
Vance Ginn, Ph.D.
|