Property tax relief is on the ballot in May, but will it really provide relief?
Gov. Greg Abbott on Wednesday called a special election for May 7 for two measures addressing property taxes that passed during the summer legislative special sessions.
Municipal and school board elections are also slated for that date.
Abbott’s proclamation puts two constitutional amendments on the ballot. Proposition 1 would allow the state legislature to reduce the amount of a limitation on the total amount of ad valorem taxes imposed by public school districts on homes owned by elderly or disabled persons. The reduction would “reflect any statutory reduction from the preceding tax year in the maximum compressed rate of the maintenance and operations taxes imposed for those purposes on the homestead.”
Proposition two would increase the amount of the homestead exemption for the school district portion of a home’s tax bill from $25,000 to $40,000.
Analysis: While property taxes are high, they’re high for several reasons, and the largest isn’t addressed by either of these propositions. Property tax rates are set by the taxing entities (and that’s what the legislature wants to control), but the market value of the home is dictated by, well, the market.
Think of it in terms of buying a gallon of milk. If the sales tax is reduced from 8.5 cents per $1 to 6 cents per dollar, but the cost of milk was at one time $4 but has climbed to $6 and is still climbing, you’re still going to be paying more for milk.
The same is true with a home. Homes that were purchased 15 years ago for less than $200,000 are often selling for double that, and with multiple offers.
Increasing the homestead exemption is likely a worthy endeavor, considering the market value for homes has continued to rise rapidly and shows no real signs of abating. The last time the homestead exemption was increased was in 2015.
Public school districts are the largest portion of any property tax bill. Next Wednesday, we’ll provide a quick primer on how public schools are funded in Texas, and where your property tax dollar goes.