Civic Insights with David Billings
We all want lower property taxes, less congestion, a safe community, safe roads, and clean water.
It is statewide campaign season in Texas, and we will see many proposals on how to reduce property taxes. Governor Abbott, with an impressive $90 million campaign war chest, has announced an aggressive property-tax reform package that includes:
- Capping property-appraised value growth at approximately 3% per year (applying to all properties, not just homesteads).
- Requiring reappraisals only once every five years instead of annually.
- Requiring a two-thirds supermajority vote of local voters to approve any property-tax rate increase.
- Limiting local-government spending growth to the lesser of population growth plus inflation or 3.5%.
- Giving voters the power to force rollback elections if 15% of registered voters petition.
- Proposing a voter-decided constitutional amendment to eliminate the school district Maintenance & Operations (M&O) property taxes for homeowners.
Many Republican candidates have campaigned on eliminating property taxes entirely; however, Governor Abbott has specifically proposed eliminating only the school-district M&O portion of the property-tax bill.
Over the next few months, I will be exploring each of these proposals to determine how they would work at the local level and how they would impact our way of life and overall quality of life.
Let’s jump right into property tax relief: Can we really pay no property taxes?
In 2023, local governments levied approximately $81.4 billion in property taxes, according to the Texas Public Policy Foundation (TPPF). This means Texas would need to find $81.4 billion — yes, billion with a B in new state revenue.
The Texas Constitution prohibits a state property tax, so now what?
Let’s assume we are talking about a statewide property-tax replacement system, not a system run by individual local governments.
In Texas:
- Property taxes generate 46.1% of all state-level tax revenue (counting all local property taxes statewide).
- Sales taxes generate 26.4%.
At the local level, I looked at four cities in Rockwall County, plus the county itself:
- Property taxes create 52.4% of all local tax revenue.
- Sales taxes generate 27.0%.
Locally, roughly $79.9 million in property taxes would have to be replaced each year.
Now what? The Swap!
One proposal to eliminate property taxes is the tax swap.
The concept: Increase the state sales tax from 6.25% to approximately 20%–22% (not including the local 2% sales tax limit), which would replace the $81.4 billion currently raised through property taxes.
But we all know sales tax is a regressive tax. It impacts everyone, but hits:
- non-homeowners,
- working families, and
- our fast-growing senior population the hardest.
A 20–22% state sales tax would be disruptive and harsh, and most economists believe it would also be economically destabilizing.
The Buy-Down
The TPPF buy-down approach is much slower and more incremental. It works by:
- Gradually increasing state funding for schools, while
- Gradually reducing the school district M&O tax rate to zero over roughly ten years.
The buy-down also requires strict local-government spending constraints, which is why similar caps appear in current policy proposals, including those supported by Texans for Fiscal Responsibility and the Texas Public Policy Foundation. Both organizations generally support lowering the local spending cap from 3.5% to 0% unless voters approve an increase.
Several local governments will need to avoid the “no-development” trap and instead create a thoughtful, deliberate plan to increase sales-tax revenue. As Lt. Governor Patrick clearly stated: “No growth = no low taxes.”
Why Think Tanks Are Skeptical
Most Texas public-policy organizations are skeptical of both the swap and the buy-down:
- The Swap: requires a huge jump in the sales-tax rate.
- The Buy-Down: requires long-term budget discipline that Texas legislatures historically struggle to maintain.
- GDP Assumptions: many of these proposals assume strong, sustained economic and GDP growth for up to 20 years, a big risk if the economy slows.
The Other Challenge: Political Promises Without the Math
Some political party platforms call for the elimination of property taxes but offer no workable methodology to achieve it. That’s the gap Texans need to talk about.
The conversation about property taxes shouldn’t be about fear or slogans, it should be about building a stronger Texas that balances affordability with the core municipality services, such as public safety, which every community depends on.
Over the next few weeks, we’ll dig deeper into each proposal, ask the tough questions, and work toward solutions that keep our neighbors safe, thriving, and true to our Texas values.
Property tax relief is possible. But it requires honesty, discipline, and leadership worthy of the people they serve.
About the Author
David Billings, retired Mayor of Fate, has served the community for over a decade. A longtime business leader in the telecommunication industry, Navy veteran, and resident of Rockwall County, he brings both professional and civic experience to his writing on government, budgeting, and local economics. He is a graduate of Leadership Rockwall, North Texas Commission Leadership Program, active in several Rockwall County non-profits boards, and the American Legion.
He is passionate about civic involvement in local government, maintaining transparent governance and thoughtful strategic planning to preserve a bright future for the regions.
