School taxpayers may end up subsidizing another tax cut for businesses
If Gov. Greg Abbott has his way, many Texas homeowners soon may see part of their school property taxes be used to subsidize another tax cut for businesses. It would be the second tax reduction for businesses in two years even as school taxes continue to increase, despite a minor property tax break approved during the 2015 legislative session.
If you think your school taxes are spent only to support public schools, you should learn about a feature of the state’s school finance law that has been getting some media attention on the eve of the new legislative session. Tied to complicated school finance formulas, this feature provides that the state’s share of paying for public education decreases as local school property tax values rise.
As you know, your home and other taxable property values have been increasing, causing your school tax bills to increase even if your local school board doesn’t raise your tax rate. Statewide, property values have been increasing so much that the Legislature will see a reduction of about $2 billion in the amount of money it is required to pay for public schools during the next two-year budget period.
Legislators could change the law and keep paying the $2 billion – or more. But early signs indicate the governor and the legislative majority don’t plan to do that. Instead, they will spend the “windfall” on other programs, maybe even to help cover Gov. Abbott’s priority — another reduction in business taxes.
Two years ago, the Legislature approved and Abbott signed a bill that cut the business franchise tax by 25 percent across-the-board, resulting in the biennial loss of $2.6 billion in revenue for education and other state needs at a time when schools already were – and still are – under-funded.
In 2015, the Legislature and voters also approved a constitutional amendment that increased the homestead exemption on school property taxes. Collectively, it was worth $1.2 billion during the recent budget period but only about $125 for the average homeowner. Since then, rising property values have more than wiped out that savings.
Now, the governor thinks those tax reductions, particularly for business, weren’t enough.
“I want to see (more) tax cuts,” he said in an interview with reporters last month. Specifically, according to the Houston Chronicle, he said he would like to see the business franchise tax and the energy margins tax reduced “by as much as I can get.”
Or, did he mean by as much as school property taxpayers can provide?