'Is it sustainable?' $12 billion to reduce school property tax rate

AUSTIN (KXAN) --- After months of trying to reach a deal, leaders of the Texas Senate and House announced proposed legislation for property tax relief on Monday.

The proposed legislation includes:

• Over $12 billion spent on reducing the school property tax rate for all homeowners and business properties.
• Every homeowner who homesteads their home (about 5.7 million homeowners) will get a $100,000 homestead exemption.
• Non-homesteaded properties, valued at $5 million and under, including residential and commercial properties, will receive a 20% circuit breaker on appraised values as a three-year pilot project.
• The legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards.

School property tax relief

Part of that deal was to use billions of dollars to lower the school property tax rate.

But what impact might that have on school districts? Dax Gonzalez, Division Director at the Texas Association of School Boards Governmental Relations, said not much would change.

"As long as that entitlement stays the same, school districts won't see a significant drop or increase in revenue, regardless of what happens with property tax compression," Gonzalez said.

How sustainable is this?

Gonzalez said its true Texans need property tax relief. But, will the state be able to sustain this in the future?

"If the state is on the hook for more of the public education funding across the state, then if they don't have the money to pay, it might be a little bit harder, and would be a little bit harder for school districts to generate that revenue locally," he said.

Gonzalez said if there were any provisions put into law that freeze local property tax rates, that would keep districts from being able to raise money locally.

He said that would lead to a lot of cuts across the state.

How are school districts doing?

Gonzalez said this announcement comes at a time when a lot of school districts don't have enough money to deal with inflation.

"They've had to cut services, cut programs, not hire new staff, to adopt deficit budgets," he said.

One of those districts is the Austin Independent School District. It recently approved a budget with a $52 million deficit.

“Costs have continued to rise and we were hoping for some relief. Unfortunately, that has not come as of yet,” Austin ISD interim superintendent Matias Segura said.

Gonzalez said the last time the state increased school funding was in 2019. If that doesn't happen again soon, he said cuts will continue.

"It's really going to be hurtful to a lot of districts in terms of the programs that they're able to offer to their students," Gonzalez said. "The students are really gonna start noticing those programs and services not being available to them."

Gonzalez said districts are specifically asking lawmakers to increase the amount of money they receive per student and to also change their funding from attendance-based to enrollment instead.

What's next?

Both the full House and Senate have to vote on the legislation. The governor suggested he'd sign a deal if it reaches his desk.

Final approval will come down to voters since the plan needs to pass a constitutional amendment election.

That election would likely be in November.