Texas lawmakers weigh property tax relief as home values ​​rise

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As Texas homeowners reel from soaring assessment values, state lawmakers on Thursday floated ideas to cut their tax bills by using excess government funds and further limiting annual growth. the assessed value of a home.

The proposals began to take shape as members of the House Ways and Means Committee, tax drafter, posed questions to experts about how to use billions in unspent federal COVID aid, as well as a projected budget surplus of $12 billion.

Although Texas lawmakers haven’t started tabling bills, the hearing provided some insight into how they could aim to limit property taxes when they meet again in January.

The issue has been front and center in recent legislative sessions, particularly in 2019, when lawmakers blocked cities, counties and school districts from collecting more annual tax revenue. The legislation forced local governments to cut their tax rates, slowing the growth of tax bills amid Texas’ booming real estate market.

Further Limiting the Rise is a state law that caps annual increases in the assessed value of a homestead at 10 percent. On Thursday, State Rep. Morgan Meyer, a Dallas Republican who chairs the committee, called for it to be reduced to 5%.

Some who testified Thursday advised against reducing the cap, arguing it would shift the burden onto other taxpayers.

“We don’t believe assessment caps that take away existing value from roles necessarily provide significant relief,” said Dale Craymer, president of the Texas Taxpayers and Research Association. “There’s a concern that all it does is – with property tax being a zero-sum game, if you’re going to collect that money from one group of taxpayers, that means it’s the other group of taxpayers who must pay it.”

Craymer argued the effect would mirror what happened after the city of Austin doubled its homestead exemption last year, providing relief to landlords but increasing the tax burden on tenants and businesses, who were forced to make up the difference.

Several lawmakers have discussed tapping into the state budget surplus to cut school property taxes, replacing local revenue with state dollars. State Comptroller Glenn Hegar has projected that Texas will have $12 billion in reserves by the end of the current budget cycle in August 2023, thanks to an economic rebound from the COVID-19 pandemic. An official in Hegar’s office suggested the surplus could be even higher.

Meyer said he would like the “purchase” tax relief, also known as the squeeze, to stay in effect beyond the next budget cycle – although he did not specify how the state would cover the ongoing cost.

“As far as we’re doing compression, we need it to be permanent,” Meyer said. “I mean, if you’re going to give tax relief, it has to be sustainable.”

Additionally, state lawmakers will decide next year how to distribute the remaining $3 billion in federal aid from the American Rescue Plan Act, a $1.9 trillion COVID relief package passed by Congress in the spring. latest. The Legislature spent about $13 billion of Texas’ $16 billion federal allocation, setting aside $3 billion for unspecified property tax relief.

Chandra Villanueva, political analyst for left-leaning think tank Every Texan, urged the committee to instead use federal aid and the budget surplus to ensure schools remain fully funded despite declining enrollment and attendance. , measures that determine their funding levels.

Villanueva added that lawmakers, in passing their landmark property tax and school funding bills in 2019, did not include a plan to help school districts replace the “loss of revenue” imposed by tax bills. stricter property tax ceilings. Additionally, she said state funding for public education has not kept pace with inflation and other costs, leaving schools underfunded.

“If we have a $12 billion surplus, we should first look at how to improve funding for our schools, so that all of our teachers can afford homes,” Villanueva said.

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