School districts say the state's promise to cover property tax cuts leaves gaps

Texas lawmakers have raised the homestead exemption on school property taxes again and again, and they say they have tried to pay school districts back for the revenue that costs them. Some district finance officials say the state's math has not always made them whole, KERA News reported.

The blanket exemption, which cuts how much of a home's value can be taxed by schools, stood at $15,000 a decade ago. It is now $140,000, and more for seniors and people with disabilities, according to the report, which the Denton Record-Chronicle published Thursday evening.

The case for the cuts

Sen. Paul Bettencourt, a Houston-area Republican who was once Harris County's tax assessor-collector, credited the Legislature at a recent Senate committee meeting with cutting billions of dollars in property taxes over several sessions. "We've had so much legislation passed on property taxes, it would take an hour to just go name the major bills, much less the minor bills," he said.

By the count of a study from Bettencourt's office, almost 1.5 million Texans owe nothing in school property taxes today, KERA reported.

Where districts say it falls short

Under what are known as hold-harmless provisions, the state uses part of its surplus to pay districts back for the property tax revenue they lose as exemptions rise.

"In theory, anyway, we are held harmless," Johnny Hill, Plano ISD's deputy superintendent for business operations, told KERA. "In reality, there is a gap that we miss out on." He said Plano ISD believes the methods used for the most recent bill shorted it by $2 million to $3 million.

Texas Education Commissioner Mike Morath told the House Ways and Means Committee last month that about a dozen districts ended up tens of millions of dollars in the hole because of bookkeeping errors tied to those provisions. The state had overpaid them by mistake and the money had to be returned, he said.

Morath added that he worries Texas now has too many hold-harmless arrangements, most of them linked to property tax exemptions.

Sen. Molly Cook, a Democrat, told KERA the exemptions are not the root problem. She said the state would not need to lean on hold-harmless deals if it funded schools adequately to begin with, and that its promises to lower property taxes have put districts "into a tailspin" while they ask for a larger basic allotment.

More cuts on the campaign trail

Candidates from both parties are promising further property tax relief ahead of the Nov. 3 election. Thomas Brosy, a senior research associate at the Urban-Brookings Tax Policy Center, told KERA that replacing that much revenue would take billions of dollars from somewhere else. Because Texas has no income tax, he said, it is hard to picture an answer other than a large sales tax increase.

Hill said districts do not object to lower property taxes as long as the state keeps schools whole. His worry is what happens when it cannot. "I've been doing this for over 30 years," he said, "and I can tell you every 'hold harmless' that was ever set up was eventually taken away."

Sources

Denton Record-Chronicle