How to Eliminate Texas School Property Taxes in 10 Years (or Less)

Texas’ school M&O property tax, about 43% of the current $76.4 total property tax levy, can be eliminated in as little as six years without raising any existing taxes or creating a new tax.

Yet, for 25 years Texas politicians have been unsuccessful in their attempts to reduce the heavy burden of property taxes on Texans. Five major reform efforts took place in 1997, 2006, 2015, 2019, and 2021. All of these efforts have three things in common.

First, they failed. Only the 2006 attempt resulted in even a minor reduction in the property tax burden—and that was temporary. In all cases, the efforts failed to stop the rapid increase in property taxes. In 1996, the total property tax levy in Texas was $16.8 billion. In 2021, it was $73.5 billion.

Second, they did not tackle the problem underlying property tax growth, increased government spending. As long as Texas state, local, and school governments continue to increase their spending, taxes will continue to increase. Property tax reform will continue to fail until Texas’ elected officials get serious about reining in the growth of government. The only way to significantly reduce or eliminate property taxes in Texas is to reduce government spending.

Finally, they did not significantly limit the ability of local governments to continue to increase property tax revenue. Every time the Texas Legislature increased state spending for public education under the guise of “buying down” the school property tax, schools, counties, cities, and special purpose districts have simply raised local property taxes to eliminate what little “relief” taxpayers were supposed to enjoy. Usually, the local governments took advantage of various loopholes in the law that gave them the ability to ignore the few restrictions the Legislature has placed on them.

If Texas politicians are serious about serving the voters—rather than special interests, it is possible to eliminate school maintenance and operations (M&O) property taxes in a relatively short period of time. This paper, the third in a three-part series on Texas property taxes, provides an outline of how Texas can successfully eliminate the M&O portion of school property taxes in six to nineteen years, depending on the level of fiscal discipline exercised by our state politicians.

To eliminate the M&O tax in 10 years, the Texas Legislature must 1) limit annual state spending growth to 2.5%, 2) allocate 90% of surplus funds created by the spending limit to property tax relief, 3) freeze and then reduce school property revenue each year until school M&O property taxes are eliminated, and 4) require local governments to get permission of voters to raise property tax rates above the “No New Revenue” tax rate.

In ten years—depending on what the Texas Legislature does this session—the school M&O property tax will be either closing in on $60 billion or $0. Texans should let their elected officials know which outcome they prefer.