From Cape You news in Austin,
you're watching Texas this weekh
Ashley Good Oh, good Sunday mor.
There was so much talk about
property tax relief this week,
especially now that Governor Grg
Abbott has adopted the Texas Puc
Policy Foundation's plan as his,
a plan Lieutenant Governor Dan
Patrick calls, quote, fantasy.
So what's in it?
We're going straight to the sou.
But first,
let's get to the three things yu
need to know in Texas politics.
The Austin real estate investort
the center of suspended Texas Attorney
General Ken Paxton's impeachment
was arrested and charged with
federal financial crimes this w.
Nate Paul is charged with eight counts,
accused of making false statemes
to lenders to get a total of
$172,000,000 in loans for his companies.
The FBI raided Paul's offices
in downtown Austin in 2019.
Whistleblowers from the AG's
office accused Paxton of helping
Paul during the investigation,
saying Paxton benefited by havig
a home remodeled and by Paul
employing Paxton's alleged mist.
While Paxton remains under
federal investigation in the ca,
the 23 page indictment of Paul
makes no mention of Paxton.
Another big name in the legal
field is entering the Ken Paxton
impeachment proceedings.
Well known Houston attorney Tony Busby
announced he's leading Paxton's defense.
During a news conference this w,
Busby swung hard at the Texas He
investigating committee for what
he calls a shoddy investigation
into the state's top lawyer.
During a bill signing ceremony on Thursday,
Governor Greg Abbott announced e
state of Texas will now use a wr
based barrier made-up of buoys o
6 feet tall to secure the Texas,
Mexico border.
The state plans to deploy 1000 feet of
the barrier next month in Eagle Pass.
State leaders say the goal is to
stop unlawful water crossings io
Texas and instead require peoplo
enter the country at ports of e.
Texas
Governor Greg Abbott says he has
a plan to put the state on a pah
to eliminating property taxes.
The plan he's touting comes from
the Texas Public Policy Foundat.
This morning we're talking to James Quintero,
policy director for the Tppf's
Government for the People Initiative,
who is the leading expert on the plan.
We've been talking about tax elimination
for almost as long as I've been here.
And it finally seems that that message
is getting through to Texas lawmakers.
Both the House and the Senate ae
really considering some robust plans to
move us in a good direction that will
deliver not only immediate tax relief,
but permanent tax relief.
And they get there through
tax rate compression.
So tax rate compression,
for folks who are not
familiar with this idea,
they get their tax bill,
they just pay their tax bill.
What is tax rate compression?
The best way to think about tax
rate compression is that it's
equivalent to tax rate cuts.
So when the legislature moves forward
with the initiative that it's planning,
what it will do is use surplus
tax dollars to buy down the
school district tax M&amp;O.
And it will do so in a permaneny
that the plan that's currently g
bandied about right now will actually
reduce the maximum compressed r,
which again, everybody pays homeowners,
renters, businesses,
everybody pays this property tax rate,
and it will reduce it from about
$0.91 per $100.00 of value to
about $0.65 per $100.00 of valu.
That's about a 30% decrease in the tax rate.
And so long as the legislature
maintains its commitment to taxpayers,
that will be a 30% tax rate
reduction in perpetuity.
And I think people at home go, OK, well,
wait, you're talking about M&amp;O, the
maintenance and operations rate for schools.
So what does that pay for, for our schools?
Great question. So the M&amp;O rate
actually pays for day-to-day expenses.
Now one reason why the legislature is
primed to move in this direction is that
there is an interest in beginning to shift
some of this burden to the state level.
And and again, we're going to ty
and do so using surplus tax dol.
So this is not going to affect existing
programs and services delivered by the state,
but rather put to use those surs
tax dollars in a responsible wa.
And eventually what our goal is,
is to shift the entire M&amp;O burden to the
state so that we can not only deliver
immediate and longlasting tax relief,
but we can get rid of Robin Hoo.
And we ultimately, I think,
move us towards a longer term g,
which is the total elimination
of property taxes in Texas.
Texas lawmakers want to use the state's
record budget surplus to reducee
school property tax rate homeowners pay.
Governor Greg Abbott wants to go
one step further in the future,
endorsing the Texas Public Poliy
Foundation's plan to eventually
eliminate all school maintenance
and operation taxes using curret
and future budget surpluses.
When we talk about shifting
that burden to the state,
I think that's easy to say and d
want to do during times where we
have a very large budget surplu.
What happens when we don't have a surplus
and and God forbid we have a deficit.
Great question. So the legislature right
now is on the verge of approprig
$17.6 billion toward tax relief.
That's a good chunk of money, be
also have money sitting off to the side.
I want the audience to know that
we have about $10 billion in
unencumbered general revenue sig
off to the side just in case.
And in addition to that $10 bil,
we also have about a $22 billion surplus.
Monies expected in the Economic
Stabilization Fund by fiscal year 2025.
So if the if the economy hits a
wall and things really go South,
we have ample resources with which to not
only address our future budget needs,
but also maintain tax compressin
efforts moving forward.
We're starting to hear Governorg
Abbott use some of the TPPF language.
He endorsed the plan, you know,
really on Friday and then talked
more about and has tweeted
more about eliminating a tax,
eliminating a property tax.
Alluding to that M&amp;O tax rate.
The Lieutenant governor has said that
would be a very expensive thing to do.
He says it it would cost
somewhere about $55 billion.
Do you take issue with his numb?
No, the Lieutenant governor is
right that it's a big number
that we're seeking to get to 0.
But here's the good thing.
We're not trying to do
this in a single session,
but really we're trying to takea
bite out of the elephant over t.
And given the state of the Texas economy,
we are very well positioned to
be able to incrementally buy
down the school district M&O
property tax rate over time.
And in fact, our economists sug.
It is easily achievable in a 10r
time frame and if and when we were to
get to that point that would ben
absolute boon to the Texas econ.
But when we talk about the longm
TPPF plan of eliminating property taxes,
how then will you pay for schoo?
Good question. So if and when
we were to reach a point where
total elimination is on the tab,
then we've got plenty of
research to suggest that modest.
Tax rate and tax base adjustments could be
made so as to make a revenue neutral swap.
That means we're taking in the e
amount of tax dollars to pay for
government programs and service.
We're only changing how they're
collected and really putting moe
of an emphasis on the sales tax.
And I think that's a fairer
tax when you look at.
Not only what economic disincentives come
with the sales tax versus the property tax,
but it's also more broad based
and I think it will it will
lead to better tax policy.
It's worth noting Quintero is talking
about expanding the tax base or charging
sales tax on more things in a te
when the legislature has passed bills
to make more things in Texas tax free.
And while he says the tax rate
can stay virtually the same,
Lieutenant Governor Dan Patrick
says it would have to almost doe
in order for the state to bringn
enough money to fully fund scho.
Patrick held a news conference
on Tuesday to talk about why he
believes eliminating all propery
taxes just isn't realistic.
Here's some of what he said.
There's been a lot of new direc,
new direction of, well,
we're going to end all property taxes,
and that's a fantasy, but one of the.
Facets of that plan is it all 9%
of all surplus in the future wod
go just a proper we all look,
we all want to end property tax,
but you can't fund the governmet
of just tax sales taxes.
You can't do it because when the
economy is down, what happens?
You don't have the sales taxes o
what you just did the last sess.
Let me explain that to you.
I'm not sure everybody gets thi,
this 17.6 billion plan.
That means when we come back next session,
we have to do it again.
So what if we don't have
17.6 billion next time?
What if the economy collapses?
What if there's a recession?
Right now, our sales taxes are .
Now it's only about a 4% increa.
They're down from the
double digits increases.
That's why we kept some reserve back.
But so when you do compression,
that's why I say it's not perma.
You can find a link to the Lieutenant
Governor's full news conference
and more information about the
Texas Public Policy Foundation's
plan in this story on kv.com.
That's Texas this week.