Texas lawmakers examine Abbott’s plan to cut school property taxes
Texas lawmakers on Tuesday examined the multibillion-dollar cost of Gov. Greg Abbott’s proposal to eliminate school district property taxes on homeowners while keeping public schools fully funded. The Texas House Ways & Means Committee hearing came as state officials worked to size up the price tag of replacing the revenue schools now collect from homesteads.
“School finance gets very complicated very quickly,” Texas Education Agency official Mike Morath said.
Abbott’s plan builds on a series of legislative efforts to reduce Texans’ property tax burden. Most recently, lawmakers expanded the homestead exemption, allowing homeowners to avoid paying school district taxes on the first $140,000 of their home’s value. Texans who are disabled or 65 and older receive an exemption on the first $200,000.
According to Tetyana Melnyk with the Texas Comptroller’s Office, Texas school districts collect about $29 billion annually through maintenance and operations, or M&O, taxes, which pay for day-to-day school expenses.
State officials estimate about $8.6 billion of those collections currently come from homesteads, the portion Abbott wants to eliminate. During the hearing, Melnyk said that figure is projected to rise to roughly $12 billion by 2032.
While the conversation touched on Abbott’s proposal, lawmakers were broadly examining property tax relief options. During the hearing, Rep. Trey Martinez Fischer, D-San Antonio, suggested lawmakers should also consider whether sales tax relief would benefit more Texans.
“If sales tax is the workhorse for the state, when we have excess revenue, shouldn’t we be cutting the sales tax as a way to give thanks and show grace to the taxpayers that are giving so much to the state of Texas,” he said. “If we have a little extra leftover and we choose not to spend it, perhaps we should give it back to those who gave it to us to begin with.”
After Abbott announced his proposal, Lt. Gov. Dan Patrick unveiled his “Double Nickel” plan. Patrick has proposed freezing a home’s taxable value at age 55. Under current law, Texans 65 and older receive a school tax freeze on their homesteads.
