Texas Senate Committee Takes Up Property Tax Review

posted on 5.16.2022

- As Property Values Soar, Taxes May Not Follow

The Senate Finance Committee next week is taking up one of two interim charges issued by Lt. Gov. Dan Patrick, R-Houston, to examine ways to reduce Texans’ property tax burden as lawmakers prepare for the 2023 legislative session starting in January. 

The hearings come as soaring property appraisals are shocking owners, though legislative changes approved in 2019 are upending the typical impact on actual property taxes that people and businesses have to pay.

Sen. Jane Nelson, R-Flower Mound, has scheduled a meeting for Monday, May 23, at 10AM to examine how lawmakers might be able to use or dedicate state revenues in excess of the state spending limit to eliminate the school district maintenance and operations property tax, the biggest portion of the costliest property tax that Texans pay in addition to county, city and special district property taxes.

Despite the anticipated $24 billion budget surplus that state money managers project will be available in January, the state’s spending limit will prohibit lawmakers from utilizing much of the surplus to lower property tax burdens or address other pressing needs without some sort of action by lawmakers or voters.

One study Senate Finance Committee members will undertake is examining whether adjustments to existing tax exemptions are merited because of inflation or other factors.

Not the Same Old Story on Property Taxes

While soaring increases in property values have shocked taxpayers, state tax experts caution that appraisals are only half of the tax equation, with the other half being the tax rates to which those values are subjected.

Because of two major reforms lawmakers adopted in 2019 affecting school finance and local government budgeting practices, Texans are seeing some degree of relief from the typical upswing in tax payments.

“Though few tax bills are actually shrinking, the spiraling growth of property taxes of the past few decades has been abated,” according to the Texas Taxpayers and Research Association.

TTARA notes that in 2021, Texas property taxes were a record $73 billion, but would have been $79 billion had the 2019 legislation not been enacted.

TTARA: RELIEF FROM RISING VALUES

The tax policy changes require voters to be more engaged with their local governments, particularly school districts, as voter approval is required to exceed certain tax revenue thresholds when expenses outpace the growth in revenue from escalating property valuations.

Questions? Contact TAB’s Oscar Rodriguez or call (512) 322-9944.

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