Property Taxes and Public Education Funding

Property taxes are out of control, school funding formulas are outdated and broken, and local school districts are too often inefficient. While that's all related, homeowners and job creators shouldn’t be misled by the false narrative that property taxes are too high because of the state of Texas, nor should they necessarily believe the narrative that the only way to achieve better educational outcomes is for taxpayers to write a bigger check to the government. 

It’s simple: you can't cut taxes by increasing spending. 

Some are trying to claim that local school district property taxes are high because the Legislature fails to invest more state dollars in school funding to lower those property taxes. A look at the history of state property tax policy easily rebuts that false narrative. 

Remember, a homeowner’s property tax bill is computed based on two factors: a tax rate and an appraisal. Both are functions of local government, not state government.

Each time the Legislature has tried to lessen the local property tax burden and made up the difference for education with the state budget, the result was an increase in property taxes and state taxes. Any thoughtful, rational person who looks back on the recent history of our state would see that previous efforts to simply lower property taxes and inject state funds simply have not worked.

In 1997, the state increased education spending by raising the homestead exemption. While this effort may have lowered property taxes for homeowners, the property tax levy actually increased, and continued upward thereafter. 

Texas tried again in 2006 with the infamous and ill-advised franchise tax buy down of school property taxes. The result? The total property tax levy only declined by a little more than $400 million in 2007 and then increased by almost $5 billion over the next two years, despite the fact that the Legislature sent an additional $14 billion of taxpayer funds to public schools for the 2008-09 school years.

The example from the 2008-09 school years brings up another important point: the claim that the state share of funding for public schools has declined from 49% in 2008 to now 38% is misleading and misinterpreted. Using that biennium as a benchmark assumes that funding was at the appropriate level then; however, it was actually a high water mark period for education spending that slammed taxpayers. And if recapture dollars were correctly included in state funding then the share would be closer to the local share.

When temporary local property tax reductions were passed by the Legislature in 2006, there was a substantial state tax increase imposed on job creators, investors, and entrepreneurs. However, property owners who assumed they would still be benefitting from those same property tax reductions in 2008-09 were surprised when it came time to pay their taxes. 

Despite funds from the state’s budget for public education increasing by about $11.5 billion that biennium, the anticipated reduction in local property taxes never happened. In fact, local funding for public schools actually increased by just over $1.3 billion. In an effort to save taxpayers from the 2008-09 disaster, education spending appropriately stabilized after a change to the school finance system.

To briefly summarize: every time the state has approached the school finance and property tax issue with the goal of increasing the state’s share of public school spending and decreasing the burden of school district property taxes, the effort has failed. This leaves local property taxes high and state taxes higher, too. Talking about the state versus local share of total education spending analyzes the wrong the metric, just like a football team that focuses on fancy uniforms instead of its win-loss record. 

Whether state or local, it’s all taxpayers’ money! 

Inefficient spending was, and remains, a primary issue within the Texas education system. Existing funds are not always spent wisely. School districts allocate far too many resources and dollars to administrators and non-teaching staff. From 1993 to 2015, student enrollment increased 48% and teachers increased 56%, while non-teaching staff increased 66%. Recently, over a 15-month period, school districts approved $6 million in severance deals to 24 superintendents. I want to improve educational outcomes for our students, prioritize teachers, and respect taxpayers. 

Before we consider raising taxes or significantly increase funding for schools, we need to reallocate current funds and be more efficient with our tax dollars to improve public schools. Our state government has shown that a conservative budget (which includes tax cuts) is possible with fiscal responsibility. We can achieve sustainable property tax relief by limiting our spending at the state and local level.

Throughout the 86th legislative session, I will work cooperatively with stakeholders to achieve long-term solutions to school finance that lowers property taxes, prioritizes students and teachers, and makes the school funding formulas simpler and more transparent. 

Based on recent history, calls for increasing the state share of public education spending are really calls for increasing taxes. Some estimate that for the state share and the local share to both equal 45 percent, it would take an additional $4.5 billion per year!

I have another solution that will improve educational outcomes for our students, prioritize teachers, and respect taxpayers: we need to reallocate current funds and be more efficient with our tax dollars to improve public schools before we consider raising taxes or significantly increase funding for schools. 

Property taxpayers deserve better than the current system. They also deserve better than the drumbeat of misinformation. In 2017, we laid the foundation for a better system by creating the bipartisan Commission on Public School Finance. In 2019, we’ll fix school finance.

Public policy and funding for our schools should be judged by long-run outcomes, rather than a temporary advantage or popularity. In other words, I’m going to continue to operate off of facts, not feelings.