It’s Simple: Bust the Spending Limit to Provide Taxpayers Relief

January 18, 2023
Jeramy Kitchen
88th Legislative Session, Budget Surplus, Property Tax, Spending Cap

For years, fiscal watchdog organizations, including ours, worked to secure an additional spending limit or guardrail on the state appropriations process to prevent lawmakers from continuing the trend of expanding government at a rate faster than the population growth it is supposed to serve.

In the 87th Legislative Session (2021), lawmakers passed an additional spending limit, capping the growth of appropriations based on the rate of growth of both population and inflation. In the interim period between the 87th Legislative Session and the ongoing 88th Legislative Session, Americans have seen near-record inflation. This has partly contributed to a large increase in sales tax receipts and much of the historic budget surplus lawmakers have available to them this session.

This surplus represents a historic opportunity to return that money to taxpayers in the form of property tax relief, a key pillar in our Texas Prosperity Plan. To taxpayers’ chagrin, many lawmakers claim they are unable to provide them with the tax relief they deserve because they are beholden to a completely different spending limit.

A Historic Opportunity

If I was a betting man, I would venture to guess that lawmakers would be hard-pressed to find a taxpayer in Texas who would not sanction them to “bust a spending limit” for the sake of receiving relief on their own ever-increasing tax burdens. It is their money, after all.

The spending limit in question would take a simple majority of lawmakers in each legislative chamber to collectively choose to override it. “Simple” is the operative word. It would take at least 76 of the 150 lawmakers in the House and 16 of the 31 lawmakers in the Senate.

From a purely partisan perspective, Republicans enjoy majorities in both legislative chambers (and every statewide elected office) and have done so for two decades. Their own political party’s platform calls for the elimination of the property tax and encourages “elected officials at all levels of government to work to reverse the current trend of expanding government and the growing tax and debt burdens.” The platform goes on to state that “action is needed to reduce spending, and therefore taxation, at all levels,” and that “any budget surplus shall be applied to property tax relief.”

One would think it would be a “no-brainer” for Republican lawmakers, who enjoy a majority in both chambers of the Legislature, to use that majority to provide actual property tax relief to Texas taxpayers. One would think…

Is Republican-elected Leadership on the Same Page?

It is possible the Republican-elected leadership in each legislative chamber are not on the same page. To make matters worse, they even seem to be on a different page than Governor Abbott, who for all intents and purposes has the bully pulpit and drives many of the priorities and narratives that shape the legislative session.

Abbott had previously indicated he intended for the Legislature to provide for the largest property tax cut in Texas history. This is something he reiterated most recently at his inaugural address on Tuesday. He has also previously stated that he would want to use at least half of the budget surplus to provide for the tax cut, while simultaneously putting Texas on a path to eliminate the school Maintenance and Operations (M&O) portion of the property tax.

The current largest property tax cut in Texas history is that of $14.2 billion, which came through the means of compression in the 2008-09 biennium. If you adjust that number for inflation, it would need to be about $20 billion in today’s dollars to qualify as the “largest” property tax cut.

In the Senate, Texas Lt. Gov. Dan Patrick is simultaneously making conscious efforts to ensure the public knows his position on property taxes aligns with Abbott’s, while also promoting an approach of merely increasing the homestead exemption (yet again) and using $12 billion of the (assumed) surplus to “buy down” M&O.

House Speaker Dade Phelan has been relatively nonspecific when broaching this topic in the past. Most recently, he indicated his support for appraisal reform as a means to provide relief to taxpayers. Just a few months earlier, he indicated he had plans for the budget surplus that did not seem to include property tax relief.

That being said, both legislative chambers filed their own versions of the general appropriations act on Wednesday. Reading into the legislation, it appears that both chambers have fairly similar approaches. However, it is unknown whether leadership in those chambers agree or if the budget legislation will undergo significant changes as it makes its way through the legislative process.

Republican Party of Texas Chairman Matt Rinaldi, himself a former state lawmaker, recently told The Texas Tribune, “The only acceptable use of funds over the spending cap is to provide property tax relief to homeowners.” Will the Republican-elected leadership and Republican lawmakers agree?

There Is No Excuse

Brass tacks: There is no excuse for lawmakers not to provide actual property tax relief to Texas taxpayers this legislative session. Multiple organizations, including our own, advocate for using all or as much as possible of the surplus for this reason, while also ensuring that there is a clear path to the elimination of property tax.

Will lawmakers continue to spend and maintain a bloated and overgrown government budget, or will they cut it and return taxpayers’ money while maintaining property tax cuts? Whatever decision they make, rest assured that Texans for Fiscal Responsibility (TFR) and the voters of Texas will be watching and holding them accountable for what they decide to do with OUR tax surplus.