“$20,000,000,000. That’s how much our property taxes have risen under Abbott,” complains Beto O’Rourke, who is running for governor Greg Abbott’s job this year.
Twenty billion dollars is indeed a lot of money. Depending upon when you start counting, it could be even higher; Texas paid $49.1 billion in fiscal 2014 (the year before Abbott took office) and is paying $73.2 billion in 2021, which is $24.1 billion, a 49 percent increase.
The casual viewer might think that O’Rourke is saying Abbott raised property taxes, but that’s not what is happening here.
When Abbott took office as governor in January 2015, the median price of a home in Texas was $177,000. As of March, the median price of a home in Texas was $335,000 –nearly doubling, an 89 percent increase.
When housing prices increased 89 percent over a period of seven years, we should not be surprised that amount paid in property taxes increased 49 percent during the same time period.
Many parts of Texas – and many parts of the country – are experiencing a boom in housing demand. Lots of demand, not enough supply. When homes sell for higher prices, the value of houses is assessed higher by local tax authorities. (As a Fairfax County resident, I can assure you, this is not just a Texas phenomenon.) The good news for homeowners is that their house is worth a lot more if they want to sell; the bad news is their property taxes are getting higher. Lots of Texans are getting “sticker shock” when they get their property appraisal notices from local authorities.
There is no doubt that Texas property taxes are high. Texans’ property tax bills are determined by a formula that takes the appraised property value, subtracts any exemptions or special appraisals, divides that by 100, and multiplies that by the local property tax rate. (I know, you have a headache already.) The point is that while the state government can put certain caps on tax rates, provide more funding to localities, and make other tweaks, it does not have complete control over property tax rates, because the localities assess the value of the property and set their own rates.
Also note that Texas has no income tax, and it has a relatively low sales tax of 6.25 percent – the thirteenth-highest in the nation, tied with Massachusetts and Illinois. The state must collect money somehow, and property taxes are the way they’ve chosen to go. The fact that so many people keep moving to Texas suggests that a lot of Americans find it to be an acceptable trade-off.
In 2019, Abbott signed legislation designed to lower property taxes but admitted, “The fact is, not enough Texans actually see the property tax relief we have delivered.”
Both candidates have unveiled a slew of proposals; Abbott has proposed a “Taxpayers’ Bill of Rights” that would reduce the school district property tax rates across the state every year, offer taxpayers a discount for paying their property taxes in full early or allow the payments to be split either quarterly or semiannually without penalty, and give new homeowners an automatic reduction in the taxable value of their property if the purchase price of their home is lower than the value of the tax rolls.
O’Rourke wants to increase the state’s share of school funding, making sure the state pays at least 50 percent and “work to ensure corporations pay their fair share of property taxes through sales price disclosures. He would also work to enact policies like legalizing marijuana to bring in additional revenue and expand Medicaid to reduce pressure on property taxes.”