Home>Governmental Affairs>The Reason for Rising Property Taxes May Not Be What You Think

The Reason for Rising Property Taxes May Not Be What You Think

By Vicki Fullerton and Jaime Lee

It didn’t feel good, did it?

It’s the biggest check you’ll likely write all year. You just paid your property taxes.

It’s no longer a matter of if your property taxes went up, it’s how much … but this doesn’t have to be the case.

Take a second to review your property tax bill and you’ll likely see that the largest portion goes to your school district.

In fact, more than half (53.97%) of all local property taxes paid by Texas property owners in 2015 were levied by school districts, according to the Texas Comptroller’s most recent Biennial Property Tax Report.

Texas properties are in high demand, which translates to increased market value and higher appraisals, making Texas real estate a wise investment. Some blame skyrocketing local property taxes on these increased appraisals.

It’s safe to say all Texans want their properties to rise in value, so let’s not vilify increasing appraisals. But we also want a sustainable way to fund our state’s public school system.

There is a way we can realize increasing appraisals, decrease our local property tax burden, and still fund our public schools: Increase the state’s contribution to public education so property owners aren’t bearing the brunt at the local level.

This won’t be an easy task, but we at the Texas Association of Realtors agree with former State Rep. John Otto, who chaired the House Appropriations Committee in the 2015 legislative session, about how to start.

“A discussion needs to take place to determine the proper way to share public education costs between the state and local property taxes,” Otto said. “And once that goal is achieved, school districts should be able to lower their tax rates when the state no longer receives the benefit of growth in property values.”

The state used to pay a much larger share of the cost to fund public schools. It was only a few years ago that Texas public schools were funded 50% by local property taxes and 50% by the state.

Today, your share of the funding through local property taxes is about 62% and the state’s share is about 38%. This imbalance is largely because the state is benefiting from increased property values. Translation: You are paying more in local school property taxes because your property value went up as the state share decreased.

Over the next two years, it’s estimated that Texas public schools will see an additional 165,000 students at an added cost of $2.65 billion.

Over that same two-year period, the state will receive the benefit of your local school property taxes growing by $3.56 billion simply because properties increased in value. This will further reduce how much the state contributes to fund schools, which will then further increase your share – and the cycle will continue.

If the Texas Legislature doesn’t act to balance state and local contributions to public education, who will pay this cost? You will.

To further complicate matters, depending on your ZIP code, your money may not stay local. There are mechanisms in place to distribute school property taxes from some so-called “property wealthy” school districts to “property poor” school districts.

So how do we resolve this situation?

Our school finance system has become so complex that taking any steps toward reform will require addressing several other areas of funding. Maybe you’ve heard terms like Robin Hood, ASATR, recapture, and golden pennies, all of which play a role in the system.

There is no easy answer to comprehensive reform, but we have to start the discussion.

Former State Sen. Florence Shapiro witnessed this firsthand when she served as chair of the Senate Education Committee from 2003-2012. “There are many issues that need to be resolved in the Texas school finance system. We have discussed fairness and distribution in the system for decades, yet an equitable solution has not been enacted.  Furthermore, the imbalance of state vs. local share of public education funding has become an increasing problem as we rely more and more on local property taxpayers’ money.  The Legislature must significantly reform the public school finance system.  There are many voices to be heard and this Legislature seems poised to listen and take action, for which I commend my former colleagues.”

The leaders with the power to change this system are meeting right now. The 181 elected members of the Texas Legislature are responsible for determining the state’s budget, including the state’s share of public school funding.

It’s a great sign that the House set aside $1.5 billion in its proposed budget specifically to address recapture, ASATR, and equity, thereby ensuring that public school taxes are devoted to public schools and not spent on something else.

And we agree with former Sen. Shapiro and former Rep. Otto that it’s time to discuss the proper way to share public education costs between the state and local property taxes. Once that goal is achieved, school districts should be able to lower their tax rates and give local property owners the break you deserve.

It will take a lot of work to revamp our school finance system, but we believe Texas schoolchildren and taxpayers are worth it.

Vicki Fullerton is Chair of the Texas Association of REALTORS®.

Jaime Lee is Governmental Affairs Communications Manager for the Texas Association of RALTORS®


Jaime Lee
Governmental Affairs Communications Manager
Texas Association of REALTORS®
1115 San Jacinto Blvd., Ste. 200
Austin, TX 78701

4 thoughts on “The Reason for Rising Property Taxes May Not Be What You Think

  1. Some of the school districts are building Taj Mahls CFISD for one. The area keeps growing as better roads are built. There seems to be no end to the need for more and more schools.

  2. Agree with Dee and Bob… Might also be nice to find out what happened to the lottery money that was supposed to fund schools. Even with homestead and over 65 exemptions, the school tax is hurting our fixed income homeowners.

  3. Interesting! So the state just lets the homeowners pay an increasing percentage of the cost of education because of higher appraisals. Add the re-distribution factor and many are getting the short end of this without ever selling their home and realizing a gain. Something needs to be done to fix this imbalance.

    1. Maybe I need a better understanding of this issue and I’m sure taxation systems are intentionally complex, obscure and opaque to keep us lowly citizens in he dark. Let’s make clear that this issue affects commercial properties as well as our personal homesteads, increasing the cost of goods and services we all purchase. In fact it affects them even more so as there is no 10% annual cap for commercial.

      My takeaway from your comments, however, is that your solution seems to be rearranging the deck chairs on the titanic. The issue, it seems to me, is more one of cost control and accountability on the part of the taxing authorities. Values will do what they do, up or down. But rarely will that proportionally affect the annual operating costs of a school district.

      It bugs me to no end as I drive around helping clients search for properties, trying to find a place to operate their business on a shoestring so they can survive, and and invariably the newest, biggest, grandest structures are ones built by governments and school districts.

      The problem is transparency, or the lack thereof, in government spending. Sending the solution up the ladder to the state level makes a solution harder to see, and harder to implement. Let’s start holding those that SPEND our money accountable, and spend less time worrying about who COLLECTS it.

      Bob Latham
      Sycamore Commercial Properties

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