This week, Governor Greg Abbott announced his plan to reduce property taxes in Texas. At an event in Fort Worth, he said he wants to eliminate school property taxes for homeowners, add limits for how much appraisals can increase and add steps for local governments to increase tax rates.
"Every single year, you, my constituents, keep saying our property taxes are too high. We have to do more to lower them," Abbott said.
Some financial advisers question whether eliminating school property taxes would be viable. Abbott said Texas could use its surplus to reduce property taxes without increasing sales taxes.
Ryan Chismark, partner at Meritax Advisors, says state lawmakers should first look at long-term funding plans before cutting taxes. He says Texas cannot always count on running a surplus.
"It's just not long-term planning we can depend on," he says. "We should redirect the conversation more in line with what, historically, the governor has done which has been wonderful."
Chismark says Abbott has worked to reduce property tax increases, but he says the lieutenant governor may have a more stable long-term plan. This week, Dan Patrick said property taxes could not be completely eliminated. Instead, his plan would increase the homestead exemption from $140,000 to $180,000.
Voters also approved an additional $60,000 exemption for seniors and those with disabilities. Patrick would like to lower the age of eligibility from 65 to 55.
"Cap and cut doesn't work, which is why we're reassured by the lieutenant governor's plan," Chismark says.
Chismark says property taxes represent the largest share of the state's revenue, and lawmakers are currently "betting on a surplus" to continue. Instead of "inflammatory" calls to eliminate property tax, he says conversations should focus on the state's long-term success instead of partisan politics.
"At the end of the day, we might not be big fans of high taxation, but we should be fans of community investment: infrastructure, schools, hospitals and police forces," he says. "That's really what we're paying for. Let's make sure we're not overpaying for those things, but let's not go ahead and throw the baby out with the bathwater right now because we're on the right path."
If property taxes are lowered, Chismark says sales tax rates could increase to offset lost revenue if surpluses end. He says Arizona has dealt with budget issues after cutting their own property taxes.
"Then they increased their sales tax then they increased their income tax," he says. "They had inequities with affordability. They had school closures, shortages in funding, downgrades in bond ratings. We can't go down these paths."
Chismark says Abbott should align with Patrick, the lieutenant governor, on his plan and start an "open dialogue." He says both parties want to adequately fund education, infrastructure and public safety.
"What if everybody's right regardless of party affiliation? I think they are," he says. "So, how do we go about solving this challenge as a Texan, not as a Democrat or a Republican?"