Estimated Time to Read: 5 minutes
Texans are no strangers to high property taxes. Year after year, state lawmakers tout new legislation aimed at providing tax relief, but for many homeowners, the burden just keeps growing. During the ongoing special legislative session, Governor Greg Abbott (R) has added a key item to the agenda: imposing local government spending limits. It’s a move that directly targets one of the most significant contributors to the state’s persistent property tax problem, unchecked local spending growth.
So why is this reform both urgent and necessary, and how does local spending tie into property tax increases? Why is it, without structural change, that the state’s property tax relief efforts are just treading water? We explore that and more below.
Local Government Spending Drives Property Tax Increases in Texas
Texas does not levy a state property tax. Instead, the state allows local governments like cities, counties, school districts, hospital districts, community colleges, and more to assess and collect property taxes to fund their operations. As a result, the real drivers of tax increases are local spending decisions.
Over the last decade, spending by local governments has ballooned, often outpacing population growth and inflation. This spending growth is financed almost exclusively through property tax revenue, which means that when cities approve new budgets with more programs, higher salaries, or new debt-financed projects, they inevitably demand more from property owners.
The state has tried to mitigate this by placing limits on property tax revenue growth, such as the 3.5% voter approval threshold for cities and counties under Senate Bill 2 (2019), but these measures only go so far. Many local entities have found workarounds, like exploiting disaster exemptions or using debt issuance and fees to avoid voter scrutiny. Without directly limiting how much local governments can spend, tax relief will continue to be temporary at best.
The Illusion of Property Tax Relief Without Spending Reform
Each legislative session, Texas lawmakers commit billions of state tax dollars toward property tax “relief”, usually through school finance “compression”. While this lowers the school maintenance and operations (M&O) tax rate, local school districts can still increase spending in other ways (such as issuing bonds for facilities, often without true cost transparency). Meanwhile, cities and counties are largely untouched by this relief because their levies are governed by entirely different mechanisms.
The core problem is this: the state reduces its portion of the tax burden through compression, only for local governments to fill the gap with new or increased taxes of their own. It’s a zero-sum game for taxpayers, who continue paying roughly the same, or more, each year.
Without limits on local spending, any gains from state-level tax compression are eventually swallowed up by local tax increases, often through creatively structured debt or voter-approved bonds.
The Case for Statutory Local Government Spending Caps
If lawmakers are serious about delivering meaningful and lasting property tax relief, the next logical step is to implement statutory spending limits on local governments. These limits could be modeled after the state’s own constitutional spending cap, which ties general revenue spending to a combination of population growth and inflation.
Such a reform would:
- Force fiscal discipline on local governments by requiring that spending increases stay within reasonable economic bounds.
- Prevent backdoor tax increases, where governments raise spending beyond growth and fund it through tax hikes or debt.
- Level the playing field between taxpayers and local bureaucracies, which often wield disproportionate control over budgets and tax policy.
- Complement property tax compression, ensuring that state dollars used for tax relief aren’t undermined by offsetting local tax growth.
Lawmakers could also consider requiring voter approval for budgets that exceed the spending cap, adding an extra layer of accountability.
Local Opposition and the Taxpayer-Funded Lobbying Problem
Efforts to limit local spending are frequently met with intense opposition, not from everyday Texans, but from the very governments the limits would apply to. Through taxpayer-funded lobbying, cities and counties spend millions annually to defeat reforms in Austin. They claim such limits would hinder essential services or local control.
But these arguments often ignore the fact that true local control should reside with taxpayers, not bureaucracies. And when governments use taxpayer money to lobby for more taxpayer money, it becomes a feedback loop of self-interest rather than public service.
By tying spending growth to objective economic indicators and enhancing voter oversight, the Legislature can protect both local governance and taxpayer rights.
What Real Reform Looks Like: A Path Forward
If the Legislature takes Governor Abbott’s charge seriously, a real opportunity exists to deliver long-term reform. A few policy proposals worth considering include:
- Codified Local Spending Cap: Statutorily limit annual spending growth for local entities to a formula based on population + inflation.
- Debt Transparency Requirements: Mandate disclosure of total repayment costs, interest, and property tax impact for all proposed bond issuances.
- Mandatory Budget Votes: Require elected officials to vote publicly on all budget increases above the spending cap.
- Ban on Taxpayer-Funded Lobbying: End the practice of local entities hiring lobbyists with public funds to oppose reform legislation.
- Performance-Based Budgeting: Incentivize efficient use of public dollars by linking spending decisions to measurable outcomes.
These steps, taken together, would build a framework where local budgets are sustainable, taxpayers are protected, and state-provided tax relief actually makes a dent in the long-term burden.
Conclusion: Discipline at Every Level Is the Key to Real Tax Relief
Texans are rightly frustrated that their property taxes remain high despite repeated promises of relief, but the source of the problem isn’t just in Austin; it’s in city halls, county courthouses, and school district boardrooms across the state.
Unless local spending is reined in, the Legislature’s efforts will continue to be undermined by competing local priorities. The inclusion of local spending limits in the special session agenda is a promising step. Now, lawmakers must follow through and enact bold reforms that treat the cause, not just the symptoms, of Texas’s tax burden.
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