(The Center Square) – Gov. Greg Abbott says his goal is to eliminate homeowners’ property taxes in the state of Texas. He says it’s possible to achieve over time because of the significant economic growth of the state.
All three Republican leaders, Abbott, Lt. Governor Dan Patrick and Speaker Dade Phelan, have pledged to reduce property taxes and made it a legislative priority.
They’ve also all agreed to dedicate roughly half of the $33 billion surplus, $17 billion, to provide property tax relief. The money is already appropriated, Abbott said. “Now we just need to decide how we are going to cut those property taxes.”
This is a great problem to have, he notes, when other states like California are running double-digit deficits.
However, the leaders haven’t been able to reach an agreement. With the regular session coming to a close on May 29, Abbott called a special legislative session to first address property tax relief.
On Friday, Abbott spoke at a Texas Public Policy Foundation event recapping the 88th legislative session and explaining his vision to end property taxes.
Earlier in the week, Lt. Gov. Dan Patrick highlighted his plan to reduce property taxes at TPPF, including a combination of reducing school district property taxes, referred to as compression, and increasing the homestead exemption.
After Abbott called a special legislative session directing the legislature to pass a property tax relief bill solely through compression, on Tuesday, the Senate and House passed separate and different bills and remain at a standstill.
Abbott on Friday reiterated that the goal isn’t just about reducing property taxes but eliminating them.
“How should we approach it? We must go big,” he said. “We must dream big. You’ve got to dream it and then you’ve got to do it.”
“In Texas, we don’t do things half-heartedly,” he said. “We go big, and we make sure we accomplish our big vision. Texans want to own their property, not rent it from the government. Under my property tax plan, we will put Texans on the pathway to eliminate property taxes.”
The way to do this is through compression, he said, or reducing the amount of property taxes paid to school districts, which he says will initially cut property taxes by 29%. This approach, he says, “will put us on a pathway where in the ensuing sessions we will be able to get to zero for your property tax rate, for your school district property taxes.”
He also responded to critics who said this approach isn’t feasible. He said it is because “Texas has the number one fastest growing economy in the United States of America. Our economy is now more than $2.3 trillion a year.
“We’re trying to spend $17 billion out of an economy that produces $2.3 trillion a year. That’s .007% of our whole GDP, less than one-tenth of one percent. We can do it.”
Abbott said people haven’t considered other factors. “Our largest source of revenue in the state is sales tax,” he said. “Texas is #1 for population growth. The hundreds of thousands of people coming to Texas every year are paying sales taxes,” he said. Despite economic fluctuations, he said, more people and businesses are paying sales taxes, franchise taxes and other taxes every year. “Texas has continued revenue streams,” he said.
He also said that once homeowners receive a property tax bill that’s zero dollars for school district property taxes, they’d spend more, and pay more in sales tax. The rate of increased spending hasn’t been considered in the property tax reduction debate, he said.
Another factor, he said, is that “Texas can and must find additional ways to cut spending wherever we can. There’s a more strategic way of cutting spending and that’s by dedicating revenue to make sure that you will not spend that money in the first place. You can always dedicate revenue or cut spending to make sure we live within our means.”
He compared Texas committing to eliminating property taxes to the process of buying a new home. “It’s the same process that every family in Texas goes through when they buy a house in the first place. If you buy a house, you may think, ‘well it’s a stretch for us, we may not have the income, what if we get sick or lose our job…’ People face unknowns when they buy a house. But they make a commitment. We’re going to buy this house. We’re going to find the money to pay for it. And we’ll be disciplined. We have to pay our mortgage first, and we can pay for everything else later.
“We can make that same discipline approach to the Texas budget to make sure first, we invest in the people of Texas and the taxpayers of Texas by the first thing we do is to return your taxes to you by driving down your property tax rate until it gets to zero.”
The first special legislative session lasts for 30 days. If the legislature can’t reach an agreement, Abbott said he will call a second special legislative session until they pass property tax relief.