By State Rep. Dennis Bonnen, chair of the tax-writing House Ways & Means Committee
Texas Insider Report: AUSTIN, Texas – It’s Groundhog Day in the Legislature.
Three times from 1997 to 2006 the Legislature delivered property tax relief. Three times voters never received promised relief, and three times the state increased state spending on a property tax cut that simply vanished.
There’s a reason the political class has a credibility problem with the public: too often they don’t keep their promises.
In 2006, voters were sold a property tax cut that would reduce tax bills, on average, by $2,000. That never materialized. By the time the appraiser got his percentage, and local districts raised rates again, 80% of the promised tax cut had evaporated, never making it to homeowners.
Worse yet, county, city and special purpose districts erased the rest of the reduction completely.
Now we have a plan in the Senate that its leaders promise will reduce property taxes, on average, by $200.
The reason homeowners will never see the tax cut isn’t because Senate leaders aren’t well-meaning — they are — it’s because their proposed tax cut will be erased by rising appraisals and local rate hikes.
Texas now spends $8.4 billion a year — roughly 8% of the entire budget — to pay for illusory property tax relief. The way it works is the state replaces money districts lose from a school rate reduction, and pays the
cost of that in perpetuity.
The Senate proposes we add more than $1 billion a year to the tab. The end result is taxpayers get double-taxed.
- They send money to the state that is spent on a property tax reduction.
- Then local districts raise rates, and taxpayers pay again.
- That’s how a tax cut actually ends up as double-taxation.
And to pay for the Senate plan, we would have to bust the state spending cap to provide a temporary tax cut that homeowners will never feel.
Fool me once, shame on you. Fool me four times, shame on all of us.
Taxpayers deserve better than a temporary tax cut that busts the spending cap, expands the state budget and taxes Texans twice. That’s why I introduced a sales tax cut.
I am not going to make lofty promises. A 5% reduction in the state sales tax rate won’t produce major savings on a family meal. But over time, it adds up.
And perhaps most importantly, because it is a tax the state collects and controls, it can’t be undermined by the appraiser or local governments. It can only be taken away by a vote of a future legislature.
The sales tax cut also creates great economic benefits, including 39,000 more jobs by 2020 compared to the Senate plan. It expands personal income by more than $1 billion compared to the Senate plan. And perhaps just as importantly, it provides a tax cut to every Texan.
The Senate plan ignores an important class of property taxpayers who don’t benefit from a homestead exemption: every business in Texas.
Employers pay close to 50% of property taxes in Texas, but get no relief under the Senate plan. Under a sales tax cut, every taxpayer benefits.
I understand the lieutenant governor’s desire to deliver on property tax relief. He rode into office in 2006 on it. He heard the many complaints from taxpayers that never saw promised relief. He wants voters to think he has solved it.
But the words of candidate Patrick back in 2006 may come back to haunt Lieutenant Governor Patrick in 2015:
“I suspect the leadership has determined, as we have, that without a lowering of the appraisal caps any property tax cut will be wiped away in just a couple of years,” Patrick said.
“I was opposed to the new business tax, as were almost half of the delegates to the Republican Convention last week. One reason for my opposition was the package of bills had no permanent tax relief for homeowners.
“A cut without a cap is meaningless, and the average voter and homeowner are wise to that fact.” (source: Patrick for Senate press releases, June, 2006)
He was right in 2006. If a tax cut seven times the size as the one he is proposing today would be undermined by appraisals and no reduction in the appraisal cap, surely the same holds true in 2015 when he is not even attempting to lower the appraisal cap.
If you want temporary tax relief that never even makes it into your tax bills, the Senate plan is the way to go.
If you want real tax relief, sales tax is the way to go.
State Rep. Dennis Bonnen (R-Angleton,) serves the 25th District in the Texas House of Representatives, representing southern Brazoria County and all of Matagorda County. Representative Bonnen is chairman of the Texas House’s Ways & Means Committee.