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Home | Tag Archives: texas taxes

Tag Archives: texas taxes

Texas on pace to collect more tax revenues than predicted, but state comptroller has a few words of caution

Months after approving the state’s first quarter-trillion-dollar budget, lawmakers got word Thursday that the state’s income forecasts are even better than they expected.

In his latest official revenue estimate, which figures in the costs of legislation passed by lawmakers earlier this year, Comptroller Glenn Hegar said Texas government should end its current two-year budget period with $2.89 billion in cash left over. And it will have $9.35 billion in the Economic Stabilization Fund, better known as the rainy day fund.

In spite of that good news, Hegar expressed some caution in his letter to the governor and legislative leaders: “In fiscal 2019, the Texas economy continued to grow at rates among the highest in the nation. We are projecting continued expansion of the Texas economy in this biennium. The most likely scenario is one of steady expansion at a pace below that of the 2018-19 biennium. Risks to this estimate include ongoing uncertainty about trade and national economic policy, slowing global economic growth, and volatility in energy prices resulting from instability and potential conflict in the Middle East.”

The biggest improvements from Hegar’s last revenue estimate — produced before the legislative session began and revised in May — came from sales taxes, up $429 million; motor vehicle sales and rental taxes, $227 million; franchise taxes, $194 million; and oil production taxes, driven by higher estimates of the price of oil, $399 million. Some of that was offset by lowered estimates for revenue from insurance taxes, $188 million; natural gas production taxes, $211 million; and cigarette and tobacco taxes, $79 million.

Taxes on sales remain the state’s biggest source of general revenue, accounting for 54.2% of the total.

Lawmakers wrote and the governor signed a $250 billion budget this year, almost 16% bigger than the budget they produced two years ago, and one with significant new spending on public education and an effort to limit increases in property taxes levied by school districts and local governments.

Author: ROSS RAMSEYThe Texas Tribune

Disclosure: The Texas Comptroller of Public Accounts has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

Analysis: Property taxes in Texas are high. Don’t expect the Legislature to change that.

Restrain, reform, rein in, restrict and limit are not synonyms for the word Texas property taxpayers crave: cut.

This is an alert: Your property taxes will not be falling, in spite of all the talk about easing property taxes that is emanating from the Texas Capitol.

State lawmakers can’t make property tax rates come down. They’ve tried. It didn’t make rates come down. And even trying is expensive: It would cost the state just under $2.5 billion to replace a dime’s worth of local school property taxes; that is, to lower the property tax rate by ten cents. On a $250,000 home, that would amount to overall savings of about $20 per month in property taxes.

But the state of Texas doesn’t levy property taxes — that’s the job of local governments. And it has proved to be impossible for state lawmakers to lower taxes they don’t control.

They can try to create conditions that could lower property taxes, increasing the state’s share of the costs of big programs like public education, public health, criminal justice and mental health. But because they don’t control either the appraisals of real estate or the tax rates imposed on those properties, Texas state lawmakers cannot guarantee a cut in your property taxes.

They hear a lot about it in town hall meetings and campaign visits, though, so you can’t blame them for trying.

The best recent example was in 2006, when then-Gov. Rick Perry and the Legislature embarked on an ambitious rebalancing of public school finance that included what was supposed to be a swap that raised state taxes on corporations in return for lower local school property taxes.

The swap amounted to a $7 billion reduction in what Texans would have paid without it, the Texas Taxpayers and Research Association, a business trade group, said at the time. But taxes didn’t drop. And Perry’s explicit promise that the average homeowner would save $2,000 came back to bite him during the 2006 race for governor.

Then-Texas Comptroller Carole Keeton Strayhorn, a Republican running for governor as an independent, ran a commercial that started with Perry’s ad running on a TV set. The script:

Perry: “We kept our promises to you. The average homeowner will receive a $2,000 tax cut.”

Strayhorn: “Have you gotten your $2,000 property tax cut yet? Don’t go running to your mailbox. Turns out, most seniors get nothing. And the rest of us? Just about $52. About enough each week to buy a can of soda. We need a government that talks straight with Texans and gives us real property tax relief. And real honesty. This grandma wants to shake Austin up.”

You might be surprised at the number of Texas officeholders — those who were in office at the time and those who came in later — who still remember that commercial. It has become an important bit of the current political folklore, passed from one generation of politicians to the next.

And that cautionary tale is baked into the current conversation about property taxes. Two years ago, Texas lawmakers failed to pass limits on the size of property tax increases that could be enacted without voter approval. The state doesn’t have a property tax — the Texas Constitution prohibits it. So the logic was to allow cities and counties and special districts to impose large increases only if voters said so. The legislation fell apart over where the limit should fall; the House said 6 percent, the Senate went for 4 percent, the governor came in with a late proposal for 2.5 percent.

They’re back with the same idea, more or less, paired with the kind of higher spending on public education that would make it possible for some school districts — maybe — to lower their own property taxes without making budget cuts in schools.

“Maybe” is not a word used in airtight promises.

A perceptible change in school finance — one that taxpayers could actually feel — would cost the state an enormous amount of money. And, as in 2006, the state can’t guarantee that taxpayers would actually receive the intended benefits.

So lawmakers have resorted to words that don’t rhyme with “cuts” when they’re talking property taxes. Maybe they can limit the size of future increases. That would give them something to talk about, and voters might appreciate the work.

But it won’t lower the high property taxes voters are complaining about that. And if they don’t see relief, neither will the politicians.

Author: ROSS RAMSEYThe Texas Tribune

Analysis: The Taxes Texas School Districts are Afraid to Cut

A state law that’s supposed to keep a leash on school tax increases might be preventing temporary tax breaks in the Texas districts with the highest tax rates. But reversing it could make it easier to raise taxes.

It’s hard to tell the tax hawks from the tax doves sometimes. A legislative proposal meant to make it easier for school districts to grant temporary tax rate cuts was derailed this week by opponents who say it would also allow districts to raise taxes without voter approval.

It would do both things — and either of them would probably make property taxpayers happy.

Currently, school districts with tax rates of $1.04 or more can’t raise their rates without voter permission. They also cannot temporarily lower their rates without holding another vote when it’s time to return to the original higher rate.

Several lawmakers in the Texas House and Senate have proposed allowing a school district that’s already got a tax rate above $1.04 to lower its rate temporarily without having to hold a new election to raise it back to the original rate. If they could do that, taxpayers would be more likely to get those temporary cuts.

A district with a rate of $1.15, for instance, would be allowed to cut the rate to $1.10 for a year and then return to $1.15 without going to voters for permission. The logic is that voters had to approve the original rise to $1.15, so there’s no need to ask them again.

House Bill 486, sponsored by state Rep. Gary VanDeaver, R-New Boston, made it to the full House but was swatted down by his colleaguesttxxt on a technicality. He has time to fix it and send it back to them. The Senate is poised to consider identical legislation next week.

State Rep. Jeff Leach, R-Plano, is the one who called the foul on VanDeaver. With some amendments, Leach said, he might be persuaded to support VanDeaver’s legislation.

Leach’s home school district — Plano ISD — is a prime example of the districts in question, and his taxpayers could be among the proposed legislation’s beneficiaries.

PISD voters overwhelmingly approved a $481 million bond package in May 2016. Among other things, that money gives the district temporary budget relief, according to School Board President Missy Bender — enough to cut spending by $15.6 million and to cut $7.7 million from the district’s “Robin Hood” payment to the state this year.

But the district expects it will need to revert to its current tax rate pretty quickly. Under current law, it could cut the tax rate now — by about 3.8 cents, Bender says — but would have to hold an election to return to the current rate later. Alternatively, the district can leave things be, keep charging taxpayers the higher current rate and save the unspent proceeds for a future rainy day.

“I can’t keep it at the lower rate, but from time to time, I’d like to be able to save them money,” Bender said of the district’s property taxpayers.

Roughly a third of Texas school districts — 438 — had maintenance and operations tax rates above $1.04 in 2016, according to the Texas Education Agency. Most of those — 329 — had moved their rates all the way up to $1.17, the highest rate allowed under normal circumstances.

The current law encourages districts to leave the tax rate alone, Bender says — to skip the temporary cut and bank the money. That avoids the district’s risk and expense of a future election. Supporters of current law contend the districts should lower rates whenever they have the opportunity and shouldn’t raise them under any circumstances without voter approval.

Under the proposal stalled in the House this week but still alive in the Senate, her district would be able to lower its rate by 3.8 cents now and return — without a new vote — to its current rate later on. Supporters of changing existing law, a group that includes Plano and most of the state’s other school districts, argue taxpayers who’ve once approved a tax rate shouldn’t be asked to approve it all over again after a temporary tax cut.

The cuts in question would probably not be huge — Plano could save its average homeowner about $113 with a 3.8-cent cut this year, Bender says. But any cuts would probably be welcome; taxpayers only rarely get these temporary reprieves under current law.

“Boards are hesitant to lower the rate when they are able to do so because they would have to hold another election to return to the rate that voters had already approved,” state Rep. Donna Howard, D-Austin, told the House Ways & Means Committee at a hearing last month. Howard, who sponsored legislation identical to VanDeaver’s and made the opening argument for both of them, said any tax rate increase would be one that had previously been approved by voters.

As the districts read it, this is a choice between temporary tax cuts and no cuts at all. As the defenders of current law see it, the decisions over rising tax rates ought to be in the hands of voters and not school boards.

But only one side is dangling a tax cut.

More columns from Ross Ramsey:

Author:  ROSS RAMSEY – The Texas Tribune

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