Texas Legislature Struggles to Deliver Promised Property Tax Cuts Again
TL/DR –
The Texas Legislature is struggling to agree on a method to provide property tax cuts, with a previous $13 billion deal only providing short-term relief due to the state’s rising property values. In 2025, Governor Greg Abbott vowed to secure $10 billion in new property tax relief and measures to require two-thirds approval from voters for any tax increases, though the Senate and House have only agreed to $6.5 billion in tax relief. The article suggests that continual property tax cuts might not be sustainable due to the state’s mounting financial obligations and reliance on property taxes for revenue, particularly for public schools.
The Texas Legislature’s Struggle to Deliver Promised Property Tax Cuts
The Texas Legislature is once more grappling to fulfill the Republican-backed promise of property tax relief. In 2023, legislators attempted different tax relief strategies, eventually striking a $13 billion deal. A majority of the funds were used to reduce local school districts’ property tax rates, with the rest dedicated to increasing the tax-free threshold for home values. Although deemed a historic relief for homeowners, the savings were short-lived due to the escalating property values in Texas’ thriving housing market.
By 2025, GOP leaders again vowed to slash taxes. Governor Greg Abbott’s proposal required local governments to gain two-thirds voter approval for any tax increases, promising $10 billion in additional property tax relief.
Disagreements on Tax Cut Methods and Funding
Several months on, the House and Senate persist in promoting their preferred tax cut methods, with the former favoring additional tax compression and business cuts, while the latter pushes to raise the homestead exemption. Notably, both chambers agree to allocate only $6.5 billion for new property tax relief, falling short of the governor’s $10 billion aim. Despite this, they managed to reach a tentative agreement on the tax cut package.
Financial Implications of Property Tax Cuts
Since 2019, the state government has accrued a substantial running tab to maintain property tax cuts, accounting for 15 percent of the budgeted spending for the next two years. This state of fiscal affairs has resulted in bipartisan unease, with some Republican legislators warning of the need for tax-cut rationing. Furthermore, Texas’ coffers, having enjoyed enormous revenue surpluses in recent years due to federal pandemic aid and sales tax revenue surge, face potential economic downturn due to Trump administration’s tariffs and trade wars.
Political Projects and Funding Crisis
Potential hurdles include costly new political projects such as Abbott’s private school voucher program, estimated to cost $4 billion annually by the end of the decade. Additionally, $6.5 billion is committed to maintain the border security operation, Operation Lone Star, over the next two years. Given the growing property tax crisis, the state’s pursuit of continuous economic growth to create a low-tax, low-regulation business haven has led to an increase in population, causing housing values to surge.
Revenue Problems and Future Solutions
Texas, being a no-income tax state, heavily relies on property taxes as a significant source of revenue, particularly for public schools. As the revenue problem exacerbates, other alternatives for funding a functional society in Texas are regressive forms of taxation, such as sales taxes. This unpopular option is not without precedent, with the sales tax swap idea swiftly dying in 2019 and remaining untouched since.
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