BY Simone Carter
PUBLISHED August 29, 2023
Dallas Observer
Earlier this summer, many Lone Star lawmakers celebrated after the announcement of an $18 billion property tax cut deal. Now, the legislation’s critics say that not all that glitters is gold.
In an op-ed published last week in The Dallas Morning News, state Sen. Nathan Johnson warned readers that the sizable cut will likely incur a “big bill” down the line.
Lawmakers had a $32 billion surplus to play with this session, paving the way for the $18 billion property tax slash. Johnson, a Dallas Democrat, pondered in the piece: “[G]iven that we’ve created a permanent obligation to buy down future taxes, how are we going to pay for it when there isn’t a massive surplus?”
Great question.
Although Johnson agrees that residents are in need of a break in property taxes, he thinks the package — all things considered — is “reckless” and “unconservative.”
Johnson told the Observer on Friday that he believes in “honest conversations and sincere politics.” But he feels that at times, politics tends to lean toward populism rather than sustainable, responsible policies.
To some extent, the tax cut deal may have relieved lawmakers of the burden of having to decide how to invest in the state’s physical and social infrastructure, Johnson said. He cited a lack of “sincere political process” as motivation for writing the op-ed.
Looking ahead, we shouldn’t anticipate a gargantuan surplus like the one we saw this year, Johnson said. For instance, much of the $32 billion surplus came from pandemic-era COVID-19 funds — a (hopefully) one-time deal.
Texas shouldn’t expect the state to benefit from a similar federal infusion in future sessions.
“I felt like we were making a commitment that is more popular than it is wise,” Johnson told the Observer of the package. “Not because of what we were doing, but because of the scale at which we were doing it.”
The way Johnson sees it, lawmakers could have delivered a smaller-yet-still-handsome property tax cut for homeowners and still have had billions left to invest in areas like public education, water, healthcare, affordable housing and prison system upgrades — investments that would generate untold returns both economically and socially.
Oh, well.
The $18 billion amount that state leaders came up with was based on a campaign promise, not sound economic analysis, Johnson said. Prioritizing politics over policy can lead to unsavory consequences.
“[O]ne day, maybe because of and maybe irrespective of our politics, instead of a surplus we will face a deficit,” Johnson wrote in his op-ed. “What then? Will we fire school teachers to pay for property tax reductions for homeowners?”
Luckily, lawmakers can pull from the state’s rainy day fund when needed, Johnson said — something that they typically try to avoid. “But I would pull money out of the rainy day fund before I’d fire a teacher,” he told the Observer.
But even that well may eventually dry up.
“What if we pulled money out of the rainy day fund and then two years later we have a deficit?” he said. “At that point, you're looking at two possibilities: cuts to state services, which are already cut pretty close to the bone, or new taxes, which everyone abhors.”
The property tax cut deal didn’t include relief for renters, something that a Democratic-proposed plan would have done.
The Texas Democrats’ proposal was spearheaded by Dallas state Rep. John Bryant. In addition to helping renters and homeowners, it would have boosted teacher pay.
Speaking with the Observer in July, Bryant said that he thinks the property tax deal will prompt Texans to “be angry at the Legislature, that they didn't really address the problem of people being taxed out of their homes. Because they gave away so much money to ... corporations that are not faced with the same pressure that homeowners and renters are faced with."
Dallas Mayor Eric Johnson is “supportive of any and all ways to lower property taxes,” a spokesperson for his office told the Observer on Monday. Johnson and City Council member Cara Mendelsohn wrote the governor in July urging him to sign the property tax legislation into law.
In June, during the city's inauguration ceremony, the mayor announced that property tax relief would be among his top three priorities. He wants Big D to be the city with the lowest tax rate in the region.
Mayor Johnson also noted in a newsletter on Sunday that the City Council had rejected an effort to lower residents’ property taxes. Instead, he wrote, members passed a tax rate ceiling that would potentially cost people more in city property taxes.
The mayor brought out a colorful toy boat during last Wednesday’s council meeting to illustrate that the city is “headed toward a fiscal iceberg.”
He’s urging Dallas residents to contact their city representative: “Together, we can turn this ship around and put Dallas on a path toward fiscal responsibility.”
