Earlier this month, I noted that the Cy-Fair ISD was considering the repeal of an optional homestead exemption so it could pay for salaries and services it needed for the schools. They backed off after residents protested, choosing instead of lay off 75 employees. Cy-Fair isn’t the only district that allows this optional exemption, and it’s not the only one that is now trying to do away with it to meet its budgetary needs.
The local-option homestead exemption — as high as 20 percent of the residential property value on top of the standard $15,000 homestead allowance — was granted in more than 200 school districts during more prosperous times.
Districts can recoup half the amount of the extra exemption from the state, but only if the state has enough money left over after paying its other school-finance obligations. Some years they get nothing.
Texas Education Agency Commissioner Robert Scott told the districts last month that the state may not be able to afford future refunds.
“School districts should not expect automatic continued adjustment and should plan accordingly,” Scott wrote in a letter to the districts. “There is no certainty that a surplus of appropriations will exist in future years, and even less likelihood in the first year of a state fiscal biennium.”
This is the fruit of our bizarre and shortsighted obsession with tax cutting. We demand refunds in good times and we refuse to give back in bad times, and all the while the services we need wither and decay. I keep wondering at what point we’ll figure out that we can’t get something for nothing, and that if we really do want things like good schools and roads and hospitals and whatnot we need to pay for them.
The Center for Public Policy Priorities, an Austin-based nonprofit which advocates for needy Texans, opposes the optional homestead exemption. The group says the exemption’s benefit is concentrated in the highest income levels, with more than 43 percent of the benefit going to the 20 percent of households whose annual income exceeds $117,899.
“The regular homestead exemption of $15,000 gives a bigger exemption to those households that need it most,” said Dick Lavine, the center’s senior fiscal analyst. “Also, it seems like regional competition. The way this panned out, some areas of the state are getting a little more than others.”
Lavine said it also costs the state; this year the value lost to the exemption is projected at $428.2 million, according to the state comptroller’s office.
That’s part of the problem with basing your tax structure on something like property taxes. The Express News, which documented how the lion’s share of lower home appraisals via tax protests went to the wealthiest homeowners, demonstrates another flaw. The system we have serves a few people very well, and the rest of us not nearly so well. Simply restoring some balance would solve an awful lot of problems, but needless to say that’s much easier said than done.