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Prop 1 would give a reduction in the school property tax rate to people 65 or older and people with disabilities who have claimed the homestead exemption on their primary homes. In 2019 the Legislature reduced school property taxes for homeowners, but people over 65 and people with disabilities, whose rates were already frozen, did not get the reduction. This amendment would give them that property tax rate reduction.
The Legislative Budget Board estimates that the reduction would result in about $744 million revenue reduction to schools for the first 3 years of its implementation.
A vote “YES”:
…supports amending the state constitution to authorize the state legislature to reduce the property tax limit for school maintenance and operations taxes imposed on the homesteads of older or disabled Texans to reflect a tax rate reduction from the preceding tax year.
A vote “no”:
…opposes this amendment and would not extend the tax cut to the homesteads of older or disabled residents.
“The constitutional amendment authorizing the legislature to provide for the reduction of the amount of a limitation on the total amount of ad valorem taxes that may be imposed for general elementary and secondary public school purposes on the residence homestead of a person who is elderly or disabled to reflect any statutory reduction from the preceding tax year in the maximum compressed rate of the maintenance and operations taxes imposed for those purposes on the homestead”
• No Democrat voted against this proposition in the Texas House or the Senate.
• 11 Democratic Senators voted for, and 2 did not vote.
• 36 Democratic Representatives voted for
• 30 House Dems did not vote on this proposition.
• According to Representative Vikki Goodwin “…the short version is we voted for it because it makes a regressive tax just slightly less regressive.”
• The enabling statute for Prop 1 says districts will be “held harmless” and that the school funding formula will be adjusted by future Legislatures. However, any future Legislature is not bound by the acts (or promises) of a past Legislature. So the Texas House and Senate will have to be held accountable for replacing the funds, as there is no guarantee they will do so.
• The HCDP does not recommend how you should vote on these amendments because of the uncertainty that lost property tax revenues will be restored to school districts. Whether the funding will be restored to the full amount, will only be decided in the 2023 session of the Legislature.
Prop 2 would increase the homestead exemption for school property taxes from $25k to $40k.
However, as Representative Donna Howard points out, as written this exemption increase will not apply to older homeowners and homeowners with disabilities without additional language to do so in the enabling legislation. Also, there is no guarantee that the property tax revenue removed from local school districts will be restored. The next Legislature must pass enabling legislation to correct both those issues.
• According to the Texas Tribune, Proposition 2 would cost the state about $600 million per year or almost $3 billion over the next five years.
• It is not clear if this estimate includes the cost of extending this exemption increase to older homeowners and homeowners with disabilities.
• It does not reduce property taxes for renters or for commercial and industrial property owners.
• It would decrease school property taxes by an average of $176 per homeowner each year.
• It assumes, but does not guarantee, that the state will make up with other taxes the revenue the school districts lose.
• Senate Joint Resolution (SJR) 2 proposes that this amendment does not have a hold harmless clause.
• The fiscal note to SJR 2 says it would result in a reduction of school district property tax revenue and a partial reimbursement of that lost revenue will be provided by the state.
• The cost to the state will depend on the corresponding enabling legislation. Therefore, future legislation will be required to provide for school funding to be restored.
A vote “YES”:
…supports increasing the homestead exemption for school district property taxes from $25,000 to $40,000.
A vote “NO”:
…opposes increasing the homestead exemption for school district property taxes and maintains the existing amount at $25,000.
“The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $25,000 to $40,000.”
The HCDP does not recommend how you should vote on these amendments because of the uncertainty that lost property tax revenues will be restored to school districts. Whether the funding will be restored to the full amount, will only be decided in the 2023 session of the Legislature.
If this amendment is passed by the voters of Texas, the Texas Legislature and Governor must be held accountable to keep their promise to restore the funding that will be lost to schools.
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