Monday, July 9, 2018

#TXLEGE: On property taxes, several good proposals.

"But the former governors who were before me laid burdens on the people, and took from them bread and wine, besides forty shekels of silver. Yes, even their servants bore rule over the people, but I did not do so, because of the fear of God."
Nehemiah 5:15

With property taxes once again likely to be a major issue next session, several good proposals exist:
  • The Governor's proposal -- Governor Abbott's proposal would require local governments to obtain voter approval before they would be allowed to raise taxes over 2.5%.  Furthermore, the governor wants significantly more ballot transparency for bond elections.  Finally, the governor wants to create super-majority requirements to pass bonds!!!

    Pros: Covers all forms of local governments (school districts, cities, counties, special purpose).  The ballot transparency stuff is something we've been advocating for years.  SUPER MAJORITIES FOR BOND ELECTIONS!!!

    Cons: Doesn't 'cut' taxes in a top-line sense (although, the resulting income growth will probably mean a bottom-line cut as a percentage of household budgets.  Difficult to pass politically (Because it's so wide ranging, invites wide ranging opposition).  Rural R's and their taxpayer funded lobbyists will scream to high heaven about the alleged costs of special elections -- BS argument but simple talking point.
  • The TPPF Proposal -- TPPF's proposal would implement a strong spending cap at the state level and use the resulting savings to "buy down" school district M&O taxes over time.

    Pros: Because you're giving Rural R's and D's something they want (more state level education spending), it's more difficult for them to oppose.  Because this would only impact school districts, other forms of local governments likely to stay on sidelines.  Direct cut to biggest item on most people's tax bill.

    Having the state pick up a bigger share of the education spending tab is also the simplest way to move from a property tax to a consumption tax.

    Cons: Because it only covers school districts, won't stop cities, counties, and special purpose districts from consequently jacking up their own spending.
  • The "Steve Toth" proposal -- During convention week, former (and likely future) State Rep. Steve Toth testified in front of the legislative priorities committee in favor of ABOLISHING APPRAISAL DISTRICTS and taxing properties at the price of sale.

    We didn't know this until we heard Rep. Toth's testimony, but apparently Texas appraisal districts cost taxpayers over $1 BILLION a year in direct operating costs; thus, in addition to the tax cut for homeowners, abolishing apprasal districts saves significant money on the spending side.

    Finally, as someone who regularly participates in the battles around gentrification in a major urban area...allow this author to politely, but firmly, suggest that a serious effort to abolish appraisal districts would be VERY well received in the African-American and Hispanic communities in the major urban areas.  Woe unto the Democrat who might oppose such an effort.  In light of the #WalkAway movement, this is a point to VERY seriously consider.

    Pros: The biggest potential tax cut of all.  Possible SIGNIFICANT political upside.  Basic Fairness.

    Cons: Impossible to predict the unintended consequences of a shock to the system of this magnitude
Politically speaking, some form of the TPPF proposal is probably the easiest to get to the Governor's desk (although a serious effort on appraisal districts could take off like a prairie fire).

Bottom Line: It's way to early to know where potential votes may lie, but any of these ideas would be a significant step in the right direction.

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