Property taxes and how much they are hated by voters continues to grab the attention of state lawmakers. Whether the proposals are coming from Republicans or Democrats, though, they continue to ignore the core problem: homeowners believe their property taxes are unfair.
In Austin, a Democratic state representative has introduced a bill to give local governments the authority to do a sort of means testing on homestead exemptions for properties. The bill by Eddie Rodriguez, according to today’s Statesman, would allow a local government to give the biggest homestead exemptions to the lowest priced homes.
“It would give cities and counties more flexibility in doing property tax relief,” Rodriguez told the American-Statesman. “It’s all about the flexibility.”
This may help homeowners in an area like East Austin, where low-income homes are having their values pushed upward by gentrification. But Austin City Council member Ellen Troxclair makes a valid point that the proposal may provide little relief for middle class homeowners whose property value has gone up faster than their earnings.
Council Member Ellen Troxclair said the city should be mindful that some families with modest incomes might live in relatively high-value homes, and they might be denied needed tax relief. A million-dollar home is one thing, she said, but a family could have purchased a $100,000 home 15 years ago, only to see its taxable value grow to, say, $350,000 today, said Troxclair, vice chair of the council’s Audit and Finance Committee.
The underlying problem with the Rodriguez proposal is that means testing the value of a home does not means test the ability of someone to pay the tax.
On another property tax front, state Senator Paul Bettencourt has filed two bills—SB 1041 and SB 1042—to require greater disclosure in bond elections and government finances. SB 1041 would require bond elections disclose:
- The amount of debt currently outstanding
- Current debt service payments
- The amount of new debt being proposed
- The estimated per household burden being proposed.
In a news release, Bettencourt said: “We need to have clear and concise transparency requirements for the disclosure of debt information to voters in local bond elections. This legislation will mean that voters statewide will be able to confidently cast a more informed vote during these elections.”
On the surface, who could be against greater disclosure, but such a measure most likely would prompt voters to cast ballots against new bond spending. Even liberal Austin voters last year voted down bonds for a rail system when it was obvious the lines were unlikely to benefit them personally while adding hundreds of dollars to their home taxes each year.
There is a great deal of excitement in this session about government debt, making it look like deficit spending. I’ll try to visit this more at a later date, but essentially debt in and of itself is not bad. We go into debt to buy homes and cars, while governments go into debt to build roads and schools. The question is not so much what is the per capita debt burden—by that measure most homeowners would just give up—but whether a government is borrowing beyond its means to make debt service at the expense of daily services. The federal government borrows to operate, while state and local governments tend to borrow for capital purchases that can be likened to buying a home.
Comptroller Glenn Hegar has a web page dedicated to upcoming local bond elections. As you look through the list, you’ll see things like Cleburne ISD is going to triple its debt for school construction, while Gilmer ISD is going to more than double its debt. Kerr County is going to more than double its debt for a jail expansion. Marshall ISD currently has no debt but wants to borrow $109 million for new school construction. Montgomery County wants to borrow $350 million for roads. All told, local governments with May bond elections want to add $3.9 billion in borrowing to an existing $9.6 billion in bonded indebtedness.
If you look through the list, however, you’re not going to see obvious signs of local governments spending like they’ve gone wild on Spring break.
