Texas legislators say they’ve successfully reduced property taxes by repeatedly raising homestead exemptions. In a recent state Senate committee meeting, former Harris County tax assessor-collector and now Houston-area Sen. Paul Bettencourt took credit for helping to cut billions in property taxes over several legislative sessions.
“We’ve had so much legislation passed on property taxes, it would take an hour to just go name the major bills, much less the minor bills,” Bettencourt said.
A decade ago, the state’s blanket homestead exemption — lowering the taxable value of a home — was $15,000 dollars. Today, it’s $140,000 — more if you’re a senior or have a disability.
And while lawmakers say they’ve worked to reimburse school districts for lost property tax revenues, districts say they’re often left short.
A study from Bettencourt’s office found nearly 1.5 million Texans now pay zero school property taxes.
“In theory, anyway, we are held harmless,” said Johnny Hill, deputy superintendent for business operations at Plano ISD
“How that works is we receive less taxes, but they make up that difference in additional state aid.”
“Hold harmless” means the state will use some of its current surplus to reimburse school districts for property taxes they’ll lose out on because of rising homestead exemptions. But Hill said it doesn’t quite work out that way.
“In reality, there is a gap that we miss out on,” he said. “I think this last bill there were $2 or $3 million dollars through the methodologies that we feel like were shorted in those calculations.”
And it’s not just Plano ISD.
About a dozen school districts were in the hole tens of millions of dollars because of hold-harmless bookkeeping errors, Texas Education Commissioner Mike Morath told lawmakers last month during a House Ways and Means Committee meeting. The state, he said, mistakenly overpaid districts, and that money now had to be returned.
Morath said he worries there are too many ‘hold harmless’ agreements in Texas now, mostly tied to property tax exemptions.
“To the extent, by the way, that you can pass the school finance system with fewer hold harmlesses, that would be great,” Morath said.
School districts are funded through a combination of local property taxes and state dollars. Democratic state Sen. Molly Cook said it’s not property tax cuts that are hurting districts. She said if the state would adequately fund schools to begin with, it wouldn’t need to rely on those ‘hold harmless’ agreements to backfill their budgets.
“Even though our school districts are begging for an increase in the basic allotment,” Cook told KERA News, “doing more with less, being very fiscally responsible, the state, through its complex promises to lower your property taxes, has set them into a tailspin.”
With midterm elections just weeks away, both Republican and Democratic candidates are talking about cutting property taxes even more.
Thomas Brosy, senior research associate with the Urban-Brookings Tax Policy Center in Washington, D.C., said that would mean finding billions of dollars in taxes some other way.
“What would make up for that?” Brosy said. “Texas doesn’t have an income tax, so what’s left is basically the sales tax. The number is so large it’s hard to imagine anything but a large increase in sales taxes to make up for that.”
Brosy chalks up the latest tax-cut talks to politics in a hot campaign season.
Plano ISD’s Johnny Hill said districts are fine with property tax cuts – as long as the state makes schools whole. But he’s worried about what might happen when lawmaker’s can’t.
“I’ve been doing this for over 30 years,” Hill said, “and I can tell you every ‘hold harmless’ that was ever set up was eventually taken away.”
That would leave Hill and other districts making up the difference.
Bill Zeeble is KERA’s education reporter. Got a tip? Email Bill at bzeeble@kera.org. You can follow him on X @bzeeble.
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