Texas Legislature

Do The Costs Of Property Tax Reform Outweigh The Benefits?

Supporters of Senate Bill 2 say the measure is needed to keep people from losing their homes. Opponents say it would starve local government of funding needed to provide critical services – and charge the bill’s author with using misleading statistics to make his case.

Last May, the Senate Select Committee on Property Tax Reform held a hearing at the University of Houston. It took testimony from dozens of witnesses, but the basic message committee members drew boiled down to eight words: “Now we’re being taxed out of our home.”

Cheryl Stalinsky is a retired lobbyist for the Texas Municipal League. The 72-year-old said she regularly spoke with neighbors in Fort Bend County – neighbors who came to her, crying, after meeting with the county’s appraisal district to discuss their property taxes.

Special Coverage Of The 85th Texas Legislative Session

Special Coverage Of The 85th Texas Legislative Session

“By the time I pay taxes and insurance,” Stalinsky said, “we’re lucky to go to McDonald’s, if you know what I mean.”

Senator Paul Bettencourt of West Harris County chaired the select committee. “The bottom line, I believe, is that there’s a growing sentiment that folks are really being pressed too hard as property taxpayers, and we have to slow down their rate of increase,” he says.

After nearly a year of hearings, Bettencourt and three of his colleagues produced Senate Bill 2. The bill would require local governments to get voter approval to raise property taxes more than 4 percent. The current cap is 8 percent.

“In Harris County, the growth over the last three years has been an astonishing 36 percent,” the senator says. “That’s the average home’s taxable value. It means their tax bill’s up over $900 to everybody.”

Those numbers come from a study by the Texas Taxpayers and Research Association. Critics of SB 2 argue they greatly overstate the growth of property tax bills.

“Because what [Bettencourt is] using is the median value of a sold home in Texas over the last five years,” says Dietrich Vollrath, an associate professor of economics at the University of Houston. He says Bettencourt is assuming that, because median home prices have spiked more than 30 percent, that homeowners have seen a similar jump in tax bills.

“But that doesn’t follow,” Vollrath says, “because not everybody in Texas sold their home. And the median value of a home that’s been sold over the last five years may have gone up, but that doesn’t mean the median value of all homes has gone up.”

Vollrath argues a better measure to use is the American Community Survey, produced by the U.S. Census Bureau. According to the survey, median home value in Texas rose about 13 to 14 percent over past five years, on par with household income growth.

But Bettencourt says it’s the federal numbers that are faulty, “because the amount of taxes owed that they claim the average home was about $2,500. And believe me, the average homeowner would love to be paying only $2,500, because the real number’s about $4,500 now.”

Bettencourt says the only solution that’s fair to taxpayers is for local governments to rein in their spending. It’s an argument that goes down poorly with his fellow Republican, Harris County Judge Ed Emmett. The judge is no fan of property taxes either, but he notes they are the only revenue the county is allowed under state law. He too questions Bettencourt’s numbers. But that’s not his biggest problem.

“The four major things that county government provides are criminal justice, indigent health care, flood control, and transportation,” Emmett says.

The judge says the county has no control over the number of “customers” using the criminal justice system. It gets no help from the state in providing for indigent health care. Cutting back on flood control, given recent trends, would be a bad idea. And road construction is critical to attracting new taxpayers, such as the Exxon Mobil campus near Spring.

“So if we have to cut back on transportation, then that just brings the economic growth of our region to a screeching halt,” Emmett says. “That would be the result of Senate Bill 2.”

The Senate Finance Committee is scheduled to hear SB 2 next Tuesday, March 14.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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