Prop 1 would raise property tax exemption

It’s hard to turn down a tax cut, and it’s not likely that Texans will do that in the Nov. 3 constitutional amendment election. Early voting starts Monday.

Proposition 1 on the ballot would increase the homestead exemption for school property taxes to $25,000, up from the current $15,000.

The exemption reduces the appraised value of a homestead. Then the school district’s tax rate is applied to determine the tax.

Under the current exemption, for example, a homestead appraised at $100,000 would be taxed at $85,000.

Under the new exemption if Proposition 1 is approved, that same homestead would be taxed at $75,000. In most Texas school districts, that change would reduce the tax bill by a little more than $100.

That dollar savings might not hold when taxes are compared year-to-year, because tax bills can go up annually with higher property appraisals.

Still, the change is expected to be a net positive for most homeowners. A tax cut is a tax cut, and they’ll probably take it.

In crafting Proposition 1 and its enabling legislation, lead author Sen. Jane Nelson, R-Flower Mound, and her colleagues specified in law that the state will make all school districts whole by reimbursing them for any revenue lost because of passage of the amendment.

That in itself is also a net positive, because it shifts more of the burden of supporting local schools to the state.

Under the current school financing law, local districts have shouldered an increasing share of total school costs.

The Legislature also specified that, if Proposition 1 passes, the higher exemption will go into effect right away, on 2015 tax bills.

With all of the positives associated with Proposition 1, it has an imperfection.

Piggy-backed on the increased school property tax exemption is a constitutional prohibition against any future law imposing a transfer tax on real estate transactions.

Given the high esteem that Texans and their lawmakers properly hold for private property ownership, the chances of the Legislature ever considering a transfer tax (sales tax) on real estate are slim.

But many people, especially Realtors, want to rule it out with a constitutional prohibition.

It would make Proposition 1 a cleaner proposal to argue about a transfer tax in the future in the unlikely event that it ever came up.

But that should not change the outcome in this election.

The Star-Telegram Editorial Board recommends voting for Proposition 1.

This story was originally published October 13, 2015 at 5:59 PM with the headline "Prop 1 would raise property tax exemption."