It’s an interesting apparent paradox coming as the Texas Legislature prepares to meet next year. You can expect to hear the continued clamor about property tax reform, but, at the same time, lawmakers are heading into the session looking at a projected drop in the state’s share of public eduction funding because of rising local property taxes.
Earlier this week, the Texas Education Agency projected a drop in the state’s general revenue for public education by more than $3.5 billion over the next two years, in part because the revenue from local property taxes is expected to skyrocket. General revenue only makes up part of the state’s education funding.
Historically, the state has relied on rising local property taxes sent to Austin to fund increased education costs. In 2008, local revenue accounted for $18.2 billion in public education funding, not including higher education. The state aid was slightly higher at $18.24 billion.
Since then, state spending has remained relatively flat, peaking at $20.9 billion in 2016 and declining back to $19.6 billion in 2017. Local revenue has, though, grown to $26.2 billion in 2017, according to the Legislative Budget Office. If the education agency’s projections hold true, the local share could skyrocket to nearly $30 billion over the next two years.
In his campaign position to reform the property tax system, among other ideas, Gov. Greg Abbott addressed the school funding system.
“The state has, for too long, relied on the rapid growth of school district property tax collections to fund increases in public education spending.”
But, as Abbott noted, reforming the property tax could have an effect on the so-called Robin Hood system of financing education. In the 2016-17 school year, $1.7 billion was paid under the recapture formula school districts deemed wealthy.
A key of his plan would be to put a cap on property tax revenue. But, as he noted, a “property tax revenue cap would likely have the effect of reducing recapture payments because it would reduce the growth of school district property taxes across the board.”
In its initial meetings earlier this year, the School Finance Commission established during the last legislative session included property taxes as part of school finance reform. How much of that discussion will end up in the commission’s final report to the legislature remains to be seen. It also remains to be seen how much of Abbott’s campaign position makes its way into serious discussion when lawmakers convene early next year.
The reality, though, is that meaningful property tax reform cannot be achieved without meaningful school finance reform.
In the past, though, lawmakers have had a poor track record of addressing those issues, either singularly or together.
• Dave Mathews