Rearranging the Deck Chairs
Governor Perry has proposed further limiting the cap on property tax appraisals. Speaker Craddick is talking about a statewide property tax. But, both are ignoring the real problem. Property taxes, and the dependence of our schools on property tax funding, are the problem. The cap on appraisals will punish cities, counties, community colleges, health districts, and other entities without providing any benefit to our schools. California has already shown us the folly of capping residential property taxes. As a consequence, local governments have chased after commercial properties that generate fewer demands on government services (fire, schools, etc.) and, consequently, have created a shortage of housing that has increased the cost of living. While Craddick's statewide tax may solve the legal problems of school finance, it won't address the structural problem of our dependence on property taxes.
The challenge in Texas is that we are trying to run a 21st Century state on a 19th Century tax structure. Property taxes made sense when most wealth was in real estate. Today, though, as fixed costs, property taxes increase the cost of just about everything, from housing, to consumer goods, to doing business. In this way, Texas' reliance on property taxes hinders our competitiveness nationally and internationally. So, while the Governor and Speaker can continue to find ever more creative ways to tweak our property tax structure, it is still not going to amount to anything more than rearranging the deck chairs on the Titanic.