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MMHPI dot org. Sense Well, Hello, and welcome to the Texas Tribune
trip Cast for Friday, June second, twenty twenty three. My name is
Matthew Watkins, Managing editor of News and Politics for the trip, and today
we're going to talk again about property taxes. Lamreaker started out this year promising
the biggest property tax cut in Texas history, but when the legislative session came
to an end on Monday, the Republican leadership in the state couldn't come to
agreement on how to do that, and the fighting this week has only intensified
as the first week of a special session in which property taxes are the headline,
got under way. There's three main players in this debate, the governor,
the Lieutenant Governor, and the House Speaker, the Big Three, if
you will, but you might add a fourth to that list. The Texas
Public Policy Foundation, a conservative think tank based down the street from the Capitol
on Congress Avenue. It was at a TPPF event on Tuesday that Lieutenant Governor
Dan Patrick, you know, really kind of blasted House Speaker Dad Feeland's approach
to running the House to the session and seemed to kind of insinuate that Feeland's
plan of pushing the tax cut would kind of benefit benefit his real estate trust
that bears his name. Meanwhile, Governor Greg Abbott essentially in doors TPFs TPFs
short and long term property tax plans, urging lawmakers to adapt them, and
Habit made his own appearance at TPPF on Friday, declaring that he wants to
eliminate property taxes in Texas altogether. Joining us here to discuss these developments is
James Quintero, the policy director for Texas Public Policy Foundation's Government for the People
initiative Tax policy one of his key areas of study. And if you've been
following this fight over Twitter, you've seen the governor and Lieutenant Governor quoting his
tweets and in some cases arguing about them as well. Hey, James,
thanks for joining us. Matthew, thanks for having me on. Yeah,
we're really glad to have you. Also joining us in this conversation is Karen
Brooks Harper, who has been covering the budget this session, and we'll be
watching this kind of play out over the following week as lawmakers try to come
to a deal on this. Hey Karen, Hey, Matthew, and James.
Good to see you guys. Yeah, thanks for joining us. All
right, so I want to just kind of set the table at the beginning.
As I mentioned, the Big Three are in agreement that they want to
cut property taxes, and they've agreed to spend around seventeen billion dollars to do
it over the next two years. Some of that will pay for cuts made
in prior sessions, but a big chunk of it, more than twelve billion,
will go towards new cuts. This much we know, but we don't
know yet is how those cuts will work. And there's basically, over the
course of this debate, been three proposals out there. The first one I'll
mention I don't think we need to spend a lot of time on is the
date Feeling plan, which included, you know, spending state money to lower
down taxes, but also to lower the appraisal cap, basically limiting how much
your property could grow to the taxable value of it could grow it at least
to five percent each year, down from ten percent. This was not a
popular proposal for Dan Patrick. Some business groups came out against it, worried
that it would kind of impact the real estate market. And I think basically
where we are as feelings seem to move past it this week and instead seemed
to focus on what we could maybe say the TPPF plan, the Abbot plan,
something like that, which is the concept of compression, tax rate compression.
And James, that's where I want to start this conversation. If you
could sort of just kind of explain to us what they mean when they say
compression. What is that doing to your taxes? Wow? Great question.
You know, I think the simplest way to think about what tax compression is
is to is to think of it this way. Tax rate compression is the
same as tax rate cutting. And so you know what the what the legislature
right now is getting ready to do, I think eventually, is use surplus
revenue to cut school district maintenance and operations taxes, and they have a particular
focus on school taxes. Now you might wonder why it's because that's the biggest
part of most people's tax bill. So, you know, when when the
average person pays their taxes, about fifty five percent of the total is on
account of school district taxes and the other forty five percent tends to be a
mix of city, county, and special district taxes. Now, when you
look at the school district portion, that usually consists of two buckets. One
goes toward maintenance and operations taxes, which pays for your day to day stuff,
and the other goes to your interest in sinking tax and that usually pays
for buildings. And so what again, what lawmakers are trying to do,
or I think are getting ready to do, is use a lot of money
to shrink that mino tax. And there's a lot of reasons why I think
that's a good thing. But but that's kind of what the what both chambers
seem to have agreement on. Now, they kind of vary in you know,
one wants to also do a homestead exemption increase and the other wants to
do uh an appraisal cap or at least we're considering it. But the compression
element is where there seems to be a large amount of agreement I think,
right right, and a big I think there. And the idea here is
of course that you know, property taxes are levied at the local level,
but the state can particularly influence school district taxes because school district school funding is
basically paid through state and local tax collections, and the you know, in
theory under compression, the more state fundings that you send to you know,
school district, you can then lower the property tax collection from them from from
the local level and things like that, essentially kind of shifting the balance here
right between between state funds and and uh and and local tax collections there.
Yeah, and some in your audience be wondering, well, you know,
how, how exactly is the state able to do this? Are we sacrificing
services? And I would say no, because what the state is doing is
they've set aside a certain portion of money to not only fund the existing needs
but also build upon that. In fact, the legislature passed a three hundred
twenty one billion dollar budget for twenty twenty four and twenty five, and then
in addition, to that, or I guess as part of that, they
have a seventeen point six billion dollars set aside for tax relief, and also
they have ten billion dollars in unspent gr and they're expecting a twenty two billion
dollar fund balance in the Economic Stabilization Fund. So the state is actually enjoying
quite a windfall. And with this windfall, they're investing back into the people,
into taxpayers, and so, you know, I kind of, you
know, it's it's somewhat interesting to me that we're so caught up on the
method of delivery when I think conservatives ought to be more focused on how do
we get that number up even higher, how do we get the legislature to
go even bigger on tax relief and really help people out who are hurting right
now. And you know, based on some of the comments that the governor
made today, it sounded like maybe there was a little bit of wiggle room,
especially if you look at some of the data points that are coming out
from the Legislative Budget Board, which show that we're about a billion six under
the existing constitutional tax and expenditure limitation. So there's at least a little bit
more capacity where we could go bigger on tax relief if the body wanted to.
James and you mentioned that, you know, everyone seems to agree that
they want to spend a major chunk of money on compression. And the question
right now that seems to be before the legislature is whether to spend all the
money they've set aside or to save some of that money for home set exemptions.
And the dan Patrick plan that he is kind of laid out here is
expanding the concept of the home set exempt or expanding home st exemptions for people.
The idea here is basically, if you own the home that you live
in, you can claim a home set exemption. Right now, that number
is forty thousand dollars and you can essentially, you know, subtract forty thousand
dollars from the taxicable taxable value of your home when you're paying those taxes.
Dan Patrick has proposed bumping that up to one hundred thousand dollars. So basically,
right now, if you have a home that's worth three hundred thousand dollars,
under the current rules, it would be tax set of value of two
hundred and sixty thousand dollars. Under this proposed plan, it would go down
to two hundred thousand dollars. This is currently not the plan that Governor Abbott
wants to go with or has talked about it, and it differs the idea
that that that TPPF is pushing. Why do y'all think that focusing solely on
compression is the best way to go? Great question. You know, let
me just say this at the outset, I'm in all of the above,
guy, And so if the legislature comes forward with a mix of different approaches
and those approaches help get tax bills down, then one percent supported. Now
that said, you know, I've been here at the Foundation now for fifteen
years, believe it or not, which is terrifying to think about. And
probably for about thirteen of those fifteen years, I've been on this wild ride
trying to educate people on the benefits of eliminating property taxes. And I think
it comes down to a property rights question, and maybe we can get into
that. But but with respect to this kind of incremental school district Emino property
tax elimination, they're really three benefits here by focusing solely on compression. The
first is that it helps homeowners, renters, businesses, and really properties of
all type. Right, You're you're delivering broad based relief to the most number
of people when you do a tax rate compression plan. The same cannot be
said for a homestead exemption increase, right, that that is a concentrated benefit
to homesteaders only. Now, as a homesteader, I would probably enjoy that.
In fact, I would enjoy it. But but let's also recognize that
renters and businesses are being left out when it comes to that particular approach.
Now, the second reason why we tend to support a tax compression plan is
that it eliminates this really bad school district scheme called recapture, which I'm sure
most in your audience already know, but you know basically works like this,
you take from some to give to others. And I think there are better
ways to do school finance. And so by moving that m Ando tax rate
to zero, what you do as you put Texas on the pathway to eliminating
recapture entirely. And then, you know, the third and probably the most
important reason in my mind again is that by eliminating the m Ando tax,
what we're doing is we're we're recognizing the goal that is that is, you
know, the broader effort to eliminate property taxes entirely. Right, this is
the first step on that ultimate pathway to ending property taxes and moving to a
reformed sales tax approach. And so this is you know, we've talked a
lot about this issue in the past. There's lots of research on our website
documenting how you get from point A to point B. But but ultimately,
by using surplus revenue to compress that mino tax rate to zero, we feel
like that is the first most important marker on the pathway to eliminating property taxes
entirely. I want to there's been a couple kind of criticisms of this plan,
and I want to get into the long term goals of this in a
little bit, but first let's talk about what's kind of before us this special
session. You know, the first criticism of it would be I would say
kind of classify as the Dan Patrick criticism, right, and he has really
focused on feeling the need for some kind of home it set exemption. I
mean, really for the reason that you cited, which is the idea that
homeowners should get a larger tax break than other folks. You know, one
thing about the homestead exemption is that no matter how valuable your house is,
you get the same level of savings. And I'm not sure that Dan Patrick
is making this argument, but you know, you could make the argument.
A very significant chunk of the surplus that came into state coffers this year came
from the sales tax. The sales tax is, you know, a what
people call a regressive tax. It's a tax where the lower your income,
more likely the higher percentage of your income you'll be paying into the tax.
So why not send more of this percentage of the savings? Why not give
people who have lower home values a higher percentage of savings than people who have
higher values. But then, I mean, I think his more specific Yard
argument is that, you know, the Senate Plan gives I'm reading from a
tweet that he published earlier this week, the Senate Plan gives homeowners a permanent
twelve hundred to fourteen fifty dollars tax cut. The Abbot Slash House plan,
which is compression, only gives the average homeowner about seven hundred and forty dollars.
Because they're giving a significant portion of tax cuts to businesses and the top
twenty percent of highest priced homes. What what do you think about that argument
that he's making there. Well, you're right, you know, we are
in the place that we're in because we've had a lot of economic growth which
is translated into sales tax excess, and of course inflation plays a big part
there too, And because it's come from such a broad based revenue source,
I actually think it's only natural to return it in the broadest way possible,
which is, of course, through tax rate compression. I certainly understand the
attractiveness of the Lieutenant Governor's plan, but one thing I think, you know,
may not be most readily, most readibly recognized as the fact that when
we pass along these tax savings to businesses as part of tax compression, you
know, those ultimately translate into lower prices for consumers, higher wages for employees,
more investment gains for those who've invested in those businesses. So, you
know, there may not be an immediately recognizable benefit to the average taxpayer,
but when they go to the store, their stuff is going to be cheaper,
or they're going to get a raise, or they're going their investments are
going to perform better. And so those are things that I think may not
necessarily be accounted for in some of the numbers coming out of the Upper Chamber.
Okay, okay, Karen, I want to pause right here before we
get into the long term question and talk a little bit about the short term
politics of this. It's been a very interesting week in the legislature. You
know, on Monday, when the legislature was wrapping up usually sort of a
ceremonial day for the two chambers, we kind of went long wondering whether a
last minute tax deal would be strung that did not end up happening. And
then hours later, you know, while many of us were partying and celebrating,
you know, having our traditional siney die parties, Abbott calls a special
session and he sort of kind of lays out his chosen path. The governor
can control what the lawmakers can kind of discuss the parameters of a special session,
and he basically said, you know, I want the lawmakers to consider
property tax savings solely kind of centered around the idea of compression. That didn't
really seem to settle the debate though. The House comes in they pass a
bill, an entirely compression pression tax cut bill in which and then immediately adjourned
Siney Die sort of kind of sending the message to Dan Patrick. You know,
here's our plan, take it or leave it. Dan Patrick at this
point has neither taken it nor left it. He adjourned the Senate for several
days. They came back briefly today, and we'll be coming back tomorrow I
mean, sorry, not tomorrow, early next week. We seem to be
in a stalemate here. I mean, are there any signs of people kind
of uh, you know, coming to an agreement at this point? Well,
that's um, that's first of all, I just want to say,
that's like the longest question I've been asked ever. Um, Well, so,
um, are we are we seeing signs of an agreement? Well?
I think that James James's point about how there does happen to be agreement on
buying down M and O, and there even seems to be, you know,
agreement at least publicly on ultimately eliminating all emin O. Right. We
hear Abbotts saying that we hear some of that. Um um, but but
you know, beyond that, Um, we've just adjourned or the Senate has
just adjourned. When you cover the whole session, you start saying we even
though you're not wanting um, they've adjourned until Tuesday. The Senate has of
course, we know the House is adjourned altogether for the remainder of the session.
Um and uh. And so the Senate's coming back on Tuesday night.
So my guess is that it's not nearly as quiet in the back rooms.
You know, over the weekend there's plenty of activity going on where we can't
see them, although a lot of it has been happening in public. You've
seen a very public kind of war of words or debate, you know a
little bit of both maybe among you know Abbott and Dewhurst and um, you
know the party really you know, what I thought it was interesting in this
kind of difference is uh, you know the head Texas GFP head Matt Ronaldi
and is having um with you know, the house plan he's on. He
favors Senator's plan. Is he did say, um that he's not convinced that
the people supporting compression are actually really aiming to reduce taxes, which I mean,
but to eliminate property taxes right at the m and taxes. Um.
And so what I heard Abbot say right out of the gate. First thing
out of his mouth after property tax was was, you know, how,
um, how they need to eliminate the mno tax entirely. And that was
pretty much his whole message. So, um, you know, I guess
where where where we're seeing some you know, agreement is eliminating the property taxes
entirely. But but we're you know, whether we're going to get there this
session or the next special session or the next special session after that kind of
I don't know, someone's going to have to give right. Um at the
day, he would call them back as many as it took, and he
did say that they were going to do property taxes before anything else. Um,
I guess except for the border thing that they also did this week.
But um, you know, school choice and that kind of thing. So
you know, I guess, I guess the very The short answer to your
long question is, UM, I don't know. I don't know if there's
for seeing these lines agree? Do you mean? Is it? Say anybody?
Yeah? I mean I think it has been interesting to watch this because
Dan Patrick is obviously a passionate, emphatic Lieutenant governor. He does not he
you know, does not like to back down, and it does seem a
little bit like I mean, we saw him speaking on Tuesday at TPPF.
As we mentioned at the top of the show, did not seem happy with
Dad Feelin, was not happy with the way he run the house ran the
house, and then Dad Feeland came out and really kind of you know,
sort of backed him into a corner there by passing his bill and immediately leaving,
basically giving him the choice of sort of you know what I think a
lot of people would perceive as sort of admitting defeat on this issue or or
or forcing another special session. And you know, it is interesting to see
this Republicans fight this much over tax cuts because you know, that's one of
the key planks to the the party there. But I don't know, it
just seems like there's a lot of tension there and they're going to have to
figure a way to help people kind of save some face here. And one
of the things that I like to kind of keep in mind, and you
know, the numbers of how how much each homestead are you know, I'm
a homeowner as well, um would save you know, with each plan is
going to vary, right, It's going to vary by home value. Is
going to vary by you know, tax rate, school district, you're in
just a lot of things. But the numbers that are being thrown out twelve
hundred and fourteen hundred, you know, five hundred for you know, for
in one version of a plan for a two hundred and fifty thousand dollar house,
and in nine hundred and another version of a plan. We're if we're
looking at the real impact. It's the biggest, one of the biggest ticket
items in terms of new money in the budget is you know, if you
add the money from the last plan and the money for the new plan,
seventeen point six billions and that nothing else comes close to in terms of that.
But you're looking at reality somewhere in the neighborhood between four hundred I mean
forty and one hundred dollars a month for somebody with a three hundred and fifty
thousand dollars home in an average tax a school district taxing situation, right,
it's going to vary a little bit. But but that's the amount we're talking
about, which and I'm not You're never gonna find me sneezing at forty bucks
a month or one hundred bucks a month or two hundred bucks a month or
whatever. But when we're talking about numbers, is giant is seventeen point six
billion. And I can't imagine there's anybody that would agree with me that would
say, if there is going to be a tax, you know, a
property tax cut, who's going to vote against higher numbers at any point?
Right? However, it's way more nuanced than that. And what it always
helps to remember is this isn't you know the numbers as they come down is
there? They're They're not enormous. And I think that the where we could
probably see agreement with everybody is that down no matter what they do this time,
the goal would be to keep working towards lower properties taxes for the people
that are fighting right now, right, that makes sense? Yeah, you
know, I mean the real impact on home hone owners is very interesting to
keep in mind during all this. Definitely, as I was watching this,
you know over the weekend. Um, we are of course all very tired
after covering a very long session. James, I'm sure you have your own
fatigue there. I started trying to do the math of like how much would
I pay for them to just figure this out? And we could all go
home and rest. It is it less than what I would save on my
property taxes? You know? Yeah, I'll throw a month out of property
text savings out on that. All right, Well, let's let's pause for
a moment and here from our sponsors, and then I want to talk about
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Learn more at lone Star dot edu. Okay, so James, I
want to talk a little bit more about this long term goal. I believe
it was tppf's number one legislative priority this year to you know, eliminate or
begin the process of eliminating that mino tax that you talked about. I'd imagine
it was probably, you know, pretty exciting to for y'all to see abbot
embrace this idea. In the last couple of weeks. I believe it was
maybe one of your tweets that he quoted and said, you know, I
support the TPPF plan. Here. Does it feel like there's more momentum around
that idea than there has been, you know, in the past. Yes,
you know, I think part of the part of the interest in moving
in the tax compression direction is that there's this general frustration that you know,
over the last several sessions, the legislature has taken different steps to try and
get a handle on the property tax problem. You know, they've done various
things like institute revenue limitations. They've increased the homestead exemption. You know,
back in O eight and O nine they actually compressed tax rates by about a
third. They've done all these things over the years to try and wrestle with
the bear. But unfortunately, it seems like every couple of years we're just
back here in the same situation, trying to reimagine how to tackle this problem.
And so, you know, I think at least within the conservative movement,
that's why there's been something of a spike in the interest in our plan,
because it offers a permanent Now, well, let me let me let
me offer a caveat with that, because the Lieutenant Governor actually made a very
good point the other day when he said, look, if we increased the
homestead exemption, you know, that's a constitutional change that really isn't going to
vary over time because it's very difficult to to change the constitution. If you
do a tax compression effort, that's just a statutory change, and any future
legislature could come in and revisit that issue. And I actually I agree with
him, um. And one of the things that I was pleased to hear
from the governor today, I think is he said something along the lines of
he hoped the legislature would take up, you know, a constitutional amendment to
pinpoint where we want to go, which is a zero dollar, zero dollar
mino tax rate, and and by codifying that in the Texas Constitution, you
know, we set our goal and that's where we're marching to, and you
know, we wouldn't really have to worry about any future legislatures changing our course.
And so, you know, I hope that's something the body considers moving
forward, because because the Lieutenant Governor's point is well taken, the legislature does
need to do something to make sure that if we're going to embark on this
pathway to elimination, we stay the course. And I think we can do
that with some some good government changes up at Capitol Hill well, and also
the added challenge of figuring out how to replace the money in the school finance
system, right and you know, with whatever kind of school funding, because
you would have to do both of those things within the same timeframe. I
would think that's what you're saying, right, Yeah, Yeah, you know.
One of the one of the encouraging bits about being here in Texas is
that our economy is an absolute powerhouse and I don't see that variable changing necessarily
in the near future. Yes, we may be on the cusp of a
mild to moderate recession, but I think on the long term, Texas' economy
is poised to, i mean just grow leaps and bounds. In addition to
that, I think the inflation situation is not going to abate anytime in the
near future. We're probably going to endure a period of modest to high inflation,
which means, for state revenue purposes, our sales tax collections are going
to be elevated as compared to years past. And so when you marry those
two factors together, at least in my mind, what you get is a
lot of excess revenue in the years to come. And because the state has
done such a good job to a ENaC constitutional and statutory spending limits, that
means you, by and large, we're not blowing the doors off the budget
every time, and we're going to have the ability to enjoy those surplus revenues
in the future, which then, of course raises a questionable what do you
do with them? And at least according to our plan, you would redirect
those moneies as much as possible, as much as you know makes sense,
down to the school district level, and you replace those finances with surplus dollars
over time. And I think we can actually get all of this accomplished in
ten years or less. That's what some really smart people here at the Foundation
suggest. At least, you know, I should note that Another thing kind
of Dan Patrick said this week is he called that plan. He said that
plan is not realistic and everyone knows it. And he floated the idea that
in order to end property taxes for good, it would this is I'm quoting
him here, It would require increasing the local sales tax from around eight and
a quarter percent to about nineteen percent. I mean, is there a a
sales tax increase that would be necessary in order to do this? So,
I mean that was one idea that was floated I believe in twenty nineteen,
and lawmakers ended up projecting it right, So terrific question. Let me offer
just one point of clarification because for a lot of years, what we were
trying to encourage the body to consider is this wholesale change, moving from the
existing property tax system to a reform sales tax. And that's really where the
Lieutenant Governor's comments are aimed, because yes, you would need to adjust the
rate and the base. Now I don't depending on you know, what you
actually included in that reform sales tax. I don't think you'd have to go
necessarily above ten percent. You could probably actually stay around eight to nine percent
based on some of the recent math we've done on the strength of the economy.
But again, we kind of set aside that plan for future discussion because
it ultimately proved to be too much of a paradigm shift at the capital and
we tried to scale down our approach, and so really what we're focused on
right now is a is an incremental version of that long term plan, which
really again focuses just on using surplus tax dollars to get out the MINO part
of the equation, and so that would require no sales tax rate or base
adjustment. We're only using existing tax dollars that are above the spending limit,
and we're trying to get at the problem that way. James, you know,
we've talked about the biggest property tax cut in history. The current record
holder, I believe for that is two thousand and six, when the state
spent billions on reducing the MINO by I believe one third. Two years later,
the economy crashed, you know, and we ended up getting a twenty
eleven session that forced the state to cut thirty one billion dollars from the budget.
Five point four billion of that ended up being cut from schools. We
saw teacher cuts, larger class sizes, and it took multiple sessions to kind
of catch up with that, I believe. You know, really it might
have been even to the twenty nineteen session where you know, there was there
was more money available to kind of to finally catch up from the cuts that
were made you've mentioned, you know, there's questions about whether we're headed into
a recession. Obviously two thousand and eight was of a fairly extreme recession.
We call it the Great Recession for a reason. But I mean, I
have to ask about the kind of what The second argument I was going to
raise, in addition to the dan Patrick argument against this, was the what
about the rainy day argument? What even if Texas's economy is growing at an
incredible rate and has been for you know, generations, now there we're also
tied to the national economy. There are things that can happen that can kind
of, you know, bring down Texas with it. Are we not setting
ourselves up for every time we increase the state you know, we buy down
those taxes, as opposed to spending that surplus money on say, one time
expenses, setting up a situation where when things turn south, we're going to
have to make significant cuts to balance the budget. Horrific question. A couple
of things come to mind on that. One is I feel that the legislature
has actually, I think put a lot of money toward one time expenses and
expenditures of an unusual nature in this current budget. And I think that's why
you see kind of the expenditure growth that you do from the twenty twenty two
twenty three by a EM to the twenty twenty four twenty five by an EM.
And so for anybody, and I know your audience is in the know,
but for anybody who's not, you know, the budget that the the
last legislature passed, the eighty seventh legislature, they they spent two hundred and
forty five billion dollars. That was the budget total in the last eighty seventh
regular session. This session, that budget has grown to three hundred and twenty
one billion dollars, right, so there's a very sizable increase. Now,
um, you know, some of that is again they're counting tax relief as
an expenditure, So seventeen point six billion dollars of that three hundred and twenty
one billion is embedded with that within that amount, and then you have money
for border security and the grid and school choice and so again, you know,
there's lots built into that three twenty one. But all of that to
say they I think the legislature has has really utilized a lot of resources this
session, so I don't don't have as much concern about, you know,
how are we going to provide for needs in the future, because I feel
like we've done a lot this session and we probably need to tap the brakes
a little bit as we move forward. But that said, you know,
it is a very legitimate concern to raise that, Well, what happens if
we do all these things on tax relief and we hit a wall. And
by the way, a lot of economists will tell you that, you know,
perhaps around the November time frame is when they expect a recession to really
take hold in this country. And you know, Texas is certainly not immune
from that, were that to take place, Texas has ample resources with which
to be able to bridge any revenue shortfall. So appropriators, even though they
spend a lot of money this session, they didn't spend at all. There's
about a ten billion dollars set aside in general revenue that is not being used
for anything they're In addition to that, the we expect that the Economic Stabilization
Fund will grow to about twenty two billion dollars by the end of fiscal year
twenty twenty five. So you pair those two pots of money together and you
see that you know, we've got at least ten percent of the all funds
budget sitting off to the side. In the event that the economy hits a
wall. Now, you know, let's say things get really severe and for
whatever reason those sources of revenue are not enough. Well, at that point,
then I would suggest that we need to entertain the idea of cutting spending.
And I don't just throw that out there willy nilly. If anybody wants
to look at some of the research we put together, I've done a lot
of work to track tax levy growth over time. In fact, I've got
one document out there called just the Facts, where literally try to not provide
any commentary, but really just the data points for tax levy growth in the
thirty largest cities, counties, and school districts in Texas, and then compare
that with population and inflation. And for the vast, vast, vast majority
of the entities that I studied, all of them are exceeding their property tax
revenue collections above that population and inflation threshold leaps and bounds. In fact,
some of the large urban school districts are actually losing enrollment and while at the
same time their revenues are growing. Leaps and bounds, and so there's a
mismatch there is. Effectively, what I'm trying to say, I think there's
a lot of opportunity, based on the data to revisit what we're spending,
not only the state level, but also at the local level. And by
the way, let me leave you with one last little tidbit, because I
found this to be fascinated. Last session or the eighty seventh session, Chairman
Dan Huberty stood up on the House floor and he was kind of grousing a
little bit about a bill that I think Tasby had helped kill, And in
the process of doing so, what he disclosed was that if you if you
took every school district in the state and you combine their excess fund balances together,
you would have about twenty one point five billion dollars in total money.
So basically, school districts are sitting on savings accounts worth more than twenty one
billion dollars. Now, there is, of course a little bit of a
caveat there. TEA requires that school districts put aside about ninety days worth of
operating expense. But even if you were more generous and you took out one
hundred and ten days worth of operating expense for a rainy day, you would
still have more than six and a half billion dollars in moneies that are effectively
just kind of acting as a slush fund. And so, you know,
really, what this signals to me is that there's an opportunity to cut taxes
and be more efficient and do some taxpayer friendly things, not only at the
state level, but also at the local level. I think there's plenty of
opportunity to do that, all right, Karen, really quickly before we go
next week. The Senate comes back Tuesday night. What are we watching for
to see how this actually gets resolved? I guess we're watching to see if
they if they refer the House bill to committee, if they have any discussion
on the floor about how they might move ahead with that, if they do
some kind of move like a journeying signy die so that the governor can just
restart another special session, which is not outside the realm of possibility unless someone
has the reason why they wouldn't do that, But that's you know, or
they'll just gabble out for a few more days while they negotiate. There's the
only thing that's gonna all right, I'm gonna I'm gonna pull a John Batten
here, and the only thing that's gonna get us over the finish line is
when they agree on a plan. So short of that, there's nothing that
could happen on Tuesday that's gonna that's gonna really significantly move until until they do
that. So well, maybe we will all spend a nice weekend to relax,
get some rest, and we'll come back happier and and ready to negotiate
next week. Thank you so much, James for this great conversation. Thank
you, Karen, Thank you to our producer Justin, and thank you to
our sponsors begin SF Railway, The Meadows Mental Health Policy Institute, dhr Health,
and Lone Star College. We'll talk to y'all next week. Thank you.
Join us in June for a series of events unpacking the twenty twenty three
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