Texas lawmakers weigh $8.6B cost of Abbott school tax plan
Texas lawmakers are weighing the cost of Gov. Greg Abbott’s plan to eliminate school district property taxes on homeowners, with state officials estimating the lost revenue at $8.6 billion annually. The figure, discussed Tuesday at a Texas House Ways and Means Committee hearing, represents the share of school district maintenance and operations taxes now collected from homesteads.
Texas Education Agency official Mike Morath addressed the committee Tuesday morning.
“School finance gets very complicated very quickly,” Morath said.
Tetyana Melnyk of the Texas Comptroller’s Office told lawmakers that 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. 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 tax burdens. Lawmakers most recently 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.
Under the governor’s plan, public schools would remain fully funded despite the lost homestead revenue.
The hearing touched on other tax relief options as well. Rep. Trey Martinez Fischer, D-San Antonio, suggested lawmakers 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.
