December is typically a slow month for news. While my staff uses their very well-earned vacation time, I’ve been thinking about what we may — or may not — be writing about in 2023.
To be honest, the Register will probably stick with much of the same kinds of news and features we always emphasize, like city and county government, schools, small businesses, interesting citizens, high school sports and the like; in other words, local faces and local places.
One new wrinkle for 2023 will be the legislative session down in Austin. Our parent company, CNHI, has a sharp reporter based in Austin by the name of Ali Linan. You’ve no doubt seen her bylines from time-to-time here in the Register, and you’ll see more of them over the next several months as the state House and Senate craft a new budget.
One area of particular interest for Register will be property taxes. We all know that they are high in Cooke County and everywhere else across Texas, in large part because they are the primary way of funding local governments and schools. Texas doesn’t have an income tax system or any other large funding mechanism to help school districts, at least not yet.
State Rep. David Spiller (R-68) is pushing a familiar conservative policy proposal — replace local maintenance and operation levies (M&O, as it’s called) for schools with a statewide sales tax. He says his House Bill 43 could eliminate that expensive chunk of school property tax bills (M&O makes up about 2/3 of annual school property tax bills statewide). That would leave debt service (Interest & Sinking, or I&S) as the property tax assessed by local districts. The state would collect the sales tax and distribute it to districts according to their student population sizes.
“Right now, if local school districts want to do whatever they want to their high school out of their interest and sinking fund, they vote on a bond issue for their facilities work. That would still be the way to do it,” Spiller told me recently. “But for (M&O), we're talking about reducing that and ultimately ending that for school districts … let’s eliminate that altogether and replace it with a consumption tax, which primarily will be a sales tax.”
Sales taxes typically hit lower income earners more than higher income earner, because they pay more for necessities and have much less leftover for other bills. And the new state sales tax would have to generate at least $30 billion per year, which is currently what M&O taxes raise for school districts across the state.
“I get it, you know, it would result in higher sales taxes, but at least those are discretionary. Many of those things, you can choose whether or not you want to purchase an item or not. If you have property taxes, you don't get that choice,” Spiller said. “You will pay that tax or you will lose your property. You only have about half the people paying that tax.”
I pointed out to him that it’s a popular misconception that renter don’t pay property taxes, as their rent is calculated to cover their landlords’ property tax bills, as well as upkeep, debt service and the like. I asked him if he thought landlords would pass their tax savings onto their tenants.
Spiller acknowledged the point.
“So all of the things being equal, their rent should go down,” Spiller said. “It's gonna be supply and demand. Some are going to (lower rents) and those properties are gonna rent quicker than the others. I think the market will adjust accordingly.”
Spiller’s bill has yet to be fully costed by state budget analysts. It would be affected, should it pass, by exactly how much of the state’s projected $27 billion surplus Gov. Greg Abbott and legislative leaders want to spend on schools and property tax relief. I believe it would also require a state referendum. Even if everything goes as Spiller hopes, it would be near the end of this decade before the changes would take effect.
I don’t know if this a good idea or not, to be honest. Ultimately, that’s for voters to decide. I’ll be interested to see how far this bill gets next session, and just how much serious discussion happens between local schools, Abbott and the legislature about it.