Analysis: Property taxes rise, state education spending falls. That’s the design.

Texas Education Agency Commissioner Mike Morath testifies before the Texas Commission on Public School Finance about education outcomes on Jan. 23, 2018. 
Texas Education Agency Commissioner Mike Morath testifies before the Texas Commission on Public School Finance about education outcomes on Jan. 23, 2018. 
Bob Daemmrich for the Texas Tribune

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The state’s budget situation improves as the financial load on Texas property owners increases. That makes for noisy and gnarly politics.

Officials from the Texas Education Agency gave state budget-writers an early look at their budget numbers this week — the Trib’s Aliyya Swaby wrote about it — saying that they expect property values to rise 6.8 percent per year over the next two years Their takeaway gives a new meaning to take-away: That means local property taxpayers will be paying billions more for public schools and that the state will spend billions less than it would otherwise as a result.

This is so normal in Texas politics and state budgeting that even the finger-pointing is choreographed. Local officials say the state is funding its budget with money that’s supposed to be spent in local schools. State officials will tell you that’s how the school finance formulas are supposed to work: by figuring out local property values — what the school districts can raise locally — and then adding enough state funding to bring them to the level where the state wants them to be. Local officials will tell you that the state is scamming taxpayers, funding state government by bleeding money out of local schools and the property taxes that support them.

If that makes it sound like legislators are victims of the system, in a way — that, hey, there’s not much they can do about your local property taxes going up — all the better, at least politically.

Remember, though: Those same state lawmakers are the authors of the formulas. They have the power to change things whenever they can muster the votes.

Local school districts are supposed to have complete control over property taxes. It’s an odd dance, though. The state government is constitutionally barred from levying property taxes, so they can’t set rates and so on. But they’ve written school finance laws to keep local districts between the rails — raising enough that they’re not cheating the state and also effectively capping property tax rates for maintenance and operation of schools (big stadiums and water parks are another part of the law, for another day).

So the state isn’t setting rates. But the locals can’t put the rates wherever they want, either.

This has a terrific political advantage, making it particularly hard to figure out exactly who is raising the price of your house (or, indirectly, your apartment) every year. Slick, ain’t it?

This is a perennial issue in the Texas Legislature. Public education is big, important, expensive and political. It’s not something that can be permanently fixed, either — just look at the evidence. Every fix lasts a decade or two, and then the whole thing has to be rebalanced.

Texas remains heavily reliant on property taxes; according to the Tax Foundation, ours is the sixth highest such tax in the country. Texas ranks 12th highest for sales tax, the lion’s share of which go to the state. It’s not like there’s a lot of ready money floating around, a popular new tax to levy, or a clamor for another whack at education funding like the one made by the Legislature in 2011. Amend that, slightly: The state’s so-called Rainy Day Fund has a record balance, but legislators have been loath to tap it for ongoing expenses.

Property owners really dislike property taxes, especially in the face of a long-tailed increase in property values like Texas is in. It’s great to own an appreciating asset, but if it’s a house, it raises the cost of living whether the owners’ incomes are increasing along with it.

It’s a financial burden that becomes an irritant that becomes a political problem that becomes a legislative debate so familiar that the players can recite each other’s arguments.

TEA got to start this round by simply reciting how the machine works: Property values are rising and with them, local tax revenue. The state, as a result, will spend less on public education while locals pay more. Or was it that the state is stealing money from the local districts and funneling it to whatever is on the other end of the funnel this time.

It’s hard to remember who did what, isn’t it?



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