CRAYMER: Heres Your Session Outlook for Property Taxes Franchise Taxes Sales Taxes & The Budget

PART V of The Craymer Series": Will the Legislature lower your Property Taxes? In short the answer is no." The bar is just too high.
By Dale Craymer width=380 Texas Insider Report: AUSTIN Texas  The gavel is about to fall to convene the 86th Regular Session of the Texas Legislature. Theres always a bunch of sideline political noise on must pass" issues but in fact lawmakers really have to pass only one bill: The State Budget.

Once when asked to name the Top 3 Issues lawmakers faced then-Lt. Gov. Bill Hobby responded:

  1. Money
  2. Money and
  3. Money... Everything else is just poetry."
So whats the money situation for lawmakers and more importantly how will it affect you? The Budget: Money will be tight but the states fiscal situation is manageable. There wont be massive budget cuts. The Texas Treasury still rises and falls with the price of oil. Oil prices are probably going to be somewhat weaker over the next few years. The good news is were going to save money at the gas pump but the bad news is that lawmakers will have to say no" to a number of wish list items including tax cuts. Still there is zero zilch nada chance of a big state tax hike. Thats not really a surprise since lawmakers havent passed a major tax increase since 1991. Sales TaxesInternet shoppers may see taxes on their bills for the first time. Few out-of-state companies have collected sales tax on items they sell to Texans. When they dont you the purchaser is legally obligated to contact the Comptrollers office and pay the amount of tax due. width=197Needless to say consumers have followed this law as faithfully as they follow the speed limits in West Texas. However the U.S. Supreme Court this past year gave states new authority to force those out-of-state sellers to charge and collect sales taxes. Texas lawmakers will respond by considering legislation that simplifies the process as much as possible for purchasers and sellers. Expect to see sales tax showing up on all of your online purchases sometime around October. Now if youre unhappy with Washington for these (sort-of new) sales taxes Congress is giving you a break on your internet bill. Its a ways off but come July 2020 federal law will prohibit states from charging sales tax on internet access costs. That will cut about $50 off your annual internet bill (at a $400 million cost to the state). Franchise TaxBusinesses hoping for a franchise tax cut may have to keep on waiting for another two years. There just wont be enough money for a big tax cut. The franchise tax isnt popular least of all with smaller businesses. Still Texas boasts one of the most generous small business exemptions around (a business has to gross over $1.1 million to have even a chance of owing tax). And lacking a personal income tax Texas will remain the best state in which to start a business tax cuts or not. Property Taxes: Lets face it sales and franchise taxes are just a nuisance compared to the property tax. Texas has among the highest property taxes of any state the price we pay for being one of only six states without a personal income tax. width=338Property tax relief" is a top priority just as it has been in almost every election cycle in modern times with little yet to show for it. One has to listen carefully to how politicians use the word relief." You and I might think of relief" as a cut in our current tax load but for elected officials relief" tends to mean slowing the rate of increase.

Will the Legislature lower your property taxes? In short the answer is no." The bar is just too high.

The property tax is a $60 billion beast in Texas growing by about $4 billion annually. The state simply doesnt have enough money to make a noticeable dent in your local tax bill.

Besides state lawmakers dont levy a property tax.

Property taxes are the domain of local governments schools cities counties and a myriad of special districts. The only property taxes lawmakers could buy down" using state money are school taxes. Those account for only about half of your tax bill so school tax cuts could easily get lost as other parts of the property tax bill grows as happened in 2006 when the Legislature cut school taxes by one-third. The only way the state could actually cut school taxes enough that one would notice would be to raise other taxes to pay for it. Politically thats pretty much a non-starter.

Stan Schlueter former chair of the tax-writing Texas House Ways & Means Committee once said

The problem with tax reform is that no one remembers you for the tax you cut but they sure remember you for the tax you raised."

What about relief" by slowing the rate of increase in our property taxes?

Thats more of a possibility though attempts last session fell apart.

width=266Under current law cities counties and special districts cant raise property taxes by more than 8 without voters being able to launch a petition drive to force an election to roll-back" the increase (at least roll it back to no more than 8 percent). The House and Senate agreed last session that the election should be automatic but failed to compromise on the number that would trigger the election. The Senate was at 6 the House was at 4 and they were unable to find a number in between on which to compromise. Those limits will be back on the table in 2019 with Gov. Greg Abbott now advancing his own plan. Local officials are still opposed though and they can be among the most effective lobbyists at the Capitol. A win for taxpayers will require substantial grassroots support. If they dont hear from those who are concerned about their property taxes then local school city county or other budgets and your taxes that support them are almost certain to increase. Thats a snapshot look at whats on the Legislatures fiscal agenda at least as the 140-day session gets underway. As veteran Capitol observers know however things can change rapidly in the pink building. The Texas Taxpayers and Research Association will be closely monitoring all the activity and advocating for sound and responsible fiscal and tax policy that ensures fairness for all taxpayers. Follow along by following us on social media or learn more about these issues on our website www.ttara.org. Dale Craymer is President of the Texas Taxpayers & Research Association.
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