As public policy dilemmas go, it’s not a bad one to have.
Over the next four months, the 88th Texas Legislature will wrestle with how to spend a record $33 billion state budget surplus, a windfall that Texas Comptroller Glenn Hegar calls a “once-in-a-lifetime” opportunity for a state experiencing tremendous population growth as public resources strain to keep up. If spent wisely, the surplus billions could help set Texas on a more prosperous path for decades to come. If squandered, we will all pay the price and could regret it for just as long.
TAX RELIEF SHOULD HELP THE MOST TEXANS POSSIBLE
In his inaugural speech Tuesday, Jan. 17, Gov. Greg Abbott pledged to use the extra cash — made possible by higher energy prices, pandemic recovery and inflation — to deliver the largest property tax cut in state history.
We agree that Texas homeowners need relief from property taxes that have ballooned alongside real estate values in recent years. But we are concerned that Abbott’s insistence on dedicating at least half of the surplus to property tax relief would come at the expense of the state’s many capital improvement and social service needs.
Moreover, property tax relief wouldn’t help everyone feeling the tax bite; it would benefit only the homeowners and business owners who pay property taxes, not renters and the rest who pay sales taxes that make up more than half the state’s revenues. For that reason, state lawmakers should at least consider reducing sales taxes so that more Texans can reap the benefits.
It’s important to understand that not all the surplus is available for tax cuts or new discretionary spending. By law, about one-third must be diverted to a highway account and a rainy day fund voters approved in 1988 to help prop up state budgets in the event that oil and gas revenues crater.
Abbott hasn’t said exactly how the state should deliver the massive property tax relief he seeks. Lt. Gov. Dan Patrick, who runs the Texas Senate, has proposed increasing the annual homestead exemption from $40,000 to $70,000, reducing the amount on which homeowners must pay property taxes. That would consume about $3 billion of the $15 billion that a Senate bill unveiled last Wednesday would dedicate to property tax relief.
A reduction in the homestead exemption makes homeownership more affordable, but lawmakers should strongly consider an across-the-board property tax rate reduction instead. It would be more equitable, allowing homeowners and business owners to benefit proportionately based on what they owe.
Lawmakers should also use some of the surplus to meet dire state needs, including its crumbling water and information technology infrastructure, underpaid state workforce, inadequate health and foster care systems and more.
POPULATION GROWTH IN TEXAS STRAINING PUBLIC INFRASTRUCTURE
As Austin residents are well aware, people are moving to Texas in head-turning numbers; if current migration patterns continue, the state’s population will climb from 29 million to more than 44 million by 2060.
As it stands, state and local governments struggle more and more each year to keep up with public services.
We see it in the slow response times of state government agencies beleaguered by outdated computer systems and an underpaid state workforce that is forcing thousands of workers to seek employment in the private sector.
We see it in an overwhelmed child foster care system, with children forced to sleep in state offices and case workers who lose track of some.
And we see it in the boil water notices resulting from overwhelmed filtration and treatment systems plaguing Austin and other cities across the state. Nearly nine in 10 Texans worry the state won’t be able to provide communities with adequate water in a drought as decrepit pipes leak enough to meet the total annual municipal water needs of Austin, Fort Worth, El Paso, Laredo and Lubbock combined.
Meanwhile, nearly a million Texans live without infrastructure to support broadband internet service — mostly in rural areas — making it impossible for them to telework or access remote learning opportunities. All of these needs deserve lawmakers’ serious consideration. The budget surplus can’t fix everything overnight, but it can provide major down payments on improvements with lasting benefits for Texas.
As lawmakers grapple with the challenge of spending this historic infusion of cash, they’ll face pressure from Abbott and myriad special interest groups. Reaching a consensus on priorities won’t be easy, but the legislature would be wise to seriously consider what our entire state — not just homeowners — needs most.
Austin American-Statesman
