Texas lawmakers weigh $12B cost of Abbott school tax cut
Texas lawmakers on Tuesday examined the multibillion-dollar cost of eliminating school district property taxes on homeowners under a proposal from Governor Greg Abbott. The plan would remove the school district portion of the bill while keeping public schools fully funded, and officials estimate it could cost roughly $12 billion by 2032.
Mike Morath of the Texas Education Agency told the Texas House Ways & Means Committee on Tuesday morning that the issue is complex. “School finance gets very complicated very quickly,” Morath said.
Tetyana Melnyk with the Texas Comptroller’s Office said Texas school districts collect about $29 billion annually through maintenance and operations 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.
Abbott’s proposal builds on recent legislative efforts to reduce property taxes. 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.
While the conversation touched on Abbott’s proposal, lawmakers were broadly examining property tax relief options. State Rep. Trey Martinez Fischer, a San Antonio Democrat, 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,” Martinez Fischer 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.
