Texas Politics

Texas has a plan to limit property taxes. Here’s why Tarrant and Fort Worth are worried

Judge Glen Whitley: “the 800-pound gorilla in the room is school property tax”.

The Tarrant County Judge repeated his position, to the North East Tarrant Chamber of Commerce, on how the state, especially the senate, plays a large role in how local tax rates are determined.
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The Tarrant County Judge repeated his position, to the North East Tarrant Chamber of Commerce, on how the state, especially the senate, plays a large role in how local tax rates are determined.

Tarrant County Judge Glen Whitley isn’t impressed by the “property tax reform” plan top Texas officials rolled out Thursday.

The proposal limits property tax revenue growth at 2.5 percent a year. Whitley doesn’t believe that’s what is needed to help Texans.

“It’s the same finger pointing we’ve heard before, that local governments are the problem,” said Whitley, a Hurst Republican who has been speaking out about these concerns for more than a year.

Rising property values have led to large increases in tax bills, so much that some fear being taxed out of their homes.

The problem, Whitley said, is that the state won’t consistently put enough money into public education. And that makes local officials raise taxes to generate the needed money.

Republicans Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen announced their plan Thursday. Identical bills have been filed in the House and Senate even though lawmakers haven’t decided how to make up for the loss of school funding this proposal would bring.

“This legislation will address property tax growth for homeowners, which is 8 to 9 percent a year in some cities and counties,” Patrick said. “It will also reduce the burden on Texas businesses, too many of whom have been driven out of business by high property tax rates.”

Fort Worth Mayor Betsy Price said she supports property tax relief, but encourages the Legislature to address school fiance before looking at measures that could handicap cities and counties. Property taxes make up about 55 percent of the city’s revenue.

A 2.5 percent cap is tough to work around for cites with fixed expenses like pensions, employee raises and public safety needs, which make up more than 60 percent of the budget. If the cap had been in place in last year, Fort Worth would have needed to trim $21.1 million from this year’s budget.

“That’s money for parks, for libraries, for potholes,” Price said. “A cap on cities and counties will hamper our ability to deliver services.”

Price said she plans to keep working with state lawmakers on this issue and she’s optimistic the measures filed Thursday are just “a starting place.”

Matching proposals

Key to the plan is that it would require voters to sign off on any increase in school property taxes that are higher than 2.5 percent. Current rollback rates are set at 8 percent.

This follows property tax reform proposals two years ago that died when state lawmakers couldn’t agree on how much to limit the ability to raise tax rates. Local officials have long said a low revenue cap can hurt their ability to raise money they need to balance their budgets

Now, many are concerned about a funding shortage created by this year’s proposals, Senate Bill 2 and House Bill 2.

“School taxes are more than half the total property tax burden in Texas,” said state Rep. Chris Turner, D-Grand Prairie, who heads the Texas House Democratic Caucus. “The state needs to increase its share of public education funding in order to reduce the local burden.

“An arbitrary revenue cap, one that will also make it more difficult for local communities to fund public safety, is not going to solve this problem.”

The Texas House Republican Caucus disagrees.

“House Bill 2 is a step in the right direction towards adding transparency and understanding to the property tax process while enabling voters to have a say in any significant increase,” said Scott Sanford, policy chair of the caucus. “This bill is the beginning to many discussions and debates that will take place over the next few months.”

Reduce taxes?

State Sen. Kelly Hancock, R-North Richland Hills, is a joint author of the Senate version of this proposal.

He said now is the time for action.

“When Texans are being taxed out of their own homes, the time for talk on property tax and appraisal reform is over,” Hancock said. “The governor and both chambers of the Texas Legislature are committed to working together to provide meaningful relief.

“Taxpayers have demanded a louder voice on this issue, and as we rein in property tax growth we’ll see a significant increase in the percentage of state funding for public education, another top priority of the 86th Legislature.”

Some worry that Texas school children could end up getting short changed.

“We are encouraged that our lawmakers recognize the long-needed financial reform for our public school education system,” said Clint Bond, a spokesman for the Fort Worth school district. “We hope they also understand that over time school districts were required to rely on property taxes, and other revenue sources, to fund educational mandates required by the legislature.

“So, we are anxious to see what solutions are forthcoming to supplement any shortfalls that may result in changes to property tax considerations.”

Tarrant-area school district officials said they were reviewing the bills.

“The bills filed are quite lengthy in pages and require careful review,” said James Schiele, chief financial officer for Eagle Mountain-Saginaw schools, in a statement. “The informal information that has been provided is more along the lines of legislative intent and does not contain details necessary to determine the impact on the district. As we review the bills in more depth, we will determine the exact impact on the district. Conceptually, as homeowners ourselves, we agree that property tax relief should be explored; however, any decrease in property taxes must be coupled with a fundamental change in the funding of education in Texas.”

The education advocacy group, Texans for Public Education (T4PE), has been calling for school finance reform. The non-partisan group, which supports public education and teachers, rates politicians as friendly, neutral or unfriendly to public education.

“While I am no expert at economics, it has become glaringly obvious that there can be no real tax relief without structural reform of the public school finance system,” said Troy Reynolds, founder of Texans for Public Education. “What Mr. Abbott and the others are proposing would seem to be a Band-Aid to garner political points so that they can pretend that they’ve done something meaningful instead of reforming the school finance formulas in such a way that the local districts can be assured that the state will carry its weight.”

Whitley said property owners across the state generally pay more for public education through their local taxes than the state chips in.

In 2017, he said taxpayers ended up paying $8 billion more for public education than the state did.

Now, Whitley said, state officials are just giving Texans a “30-second sound bite” saying they “want to reduce your property taxes.”

Staff writers Diane Smith and Luke Ranker contributed to this report.

North Texas is losing its reputation as a place where housing is cheap, with home prices increasing more than 30 percent just in the past three years. As a result, many residents are finding that their annual property tax bills are shockingly higher.

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Anna M. Tinsley grew up in a journalism family and has been a reporter for the Star-Telegram since 2001. She has covered the Texas Legislature and politics for more than two decades and has won multiple awards for political reporting, most recently a third place from APME for deadline writing. She is a Baylor University graduate.