Senators stood and cheered after unanimously passing Senate Bill 2, the property tax relief piece, and Senate Bill 3, a franchise tax cut piece.
“That’s what we do in Texas, is come up with Texas-sized solutions to Texas challenges,” he said on the Senate floor. “And there’s nothing better to be able to say, for every taxpayer in the state, their property tax rate is coming down substantially for every home state and the state.”
$12 billion for school districts to lower their tax rates
Local property taxpayers will see a reduction through rate compression, which is when the state gives more money to school districts so they in turn can lower their tax rates. Rate compression does not give districts additional funding, but merely redistributes the obligation for public school funding to fall more heavily on the state rather than local taxpayers.
In a Tuesday one-on-one interview with Lt. Governor Dan Patrick, Nexstar asked him to respond to concerns that compression is not sustainable. Prior to the House and Senate striking a deal, Patrick had been less supportive of the compression plan than the House and Gov. Greg Abbott.
“I’ve said this over and over in the last couple of months that compression is not a guarantee,” Patrick said. “So could you have, you know, an adjustment in any given year…yes, you could. But over time, we will continue to grow.”
At a conservative think-tank event last month, Abbott said that tax cuts via compression are sustainable, noting the state is receiving increasing amounts of revenue from sales and franchise taxes due to population and business growth.
But public education advocates worry about this model in the future, once the $12B for districts dries out and if there’s another major economic downturn.
Mark Wiggins, a senior lobbyist with the Association of Texas Professional Educators, points out that over the years the state has decreased its contribution to public school funding, meaning school districts have had to rely on local property taxes to fund the majority of their budgets. He expressed concern that in future sessions, Texas might not be able to maintain paying for the lion’s share of districts’ funding if the state budget decreases dramatically.
“It is just changing the ratio between the state and the local share of funding. It is not increasing the total level of funding,” he said. “Most of the school districts that are having problems right now that are unable to keep staff, that are unable to provide pay increases in order to attract and retain staff — they’re still in that same boat. This is not going to help those districts.”