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On the campaign trail in New Hampshire earlier this month, Texas Gov. Rick Perry repeated what has become a common battle cry in his campaign for the Republican nomination for president.
"We cut property taxes by one-third in the state of Texas while I've been governor," he told a crowd Oct. 1, 2011 at a "We the People" forum in Hampton, New Hampshire.
Perry has repeated the claim several times during his presidential run, and he also used it during his 2010 re-election campaign in Texas.
PolitiFact Texas checked it at the time, coming up with a ruling of Barely True, now known as Mostly False. But has anything changed in the years since? We decided to check it out.
As we discovered in early 2010, Perry is referring to House Bill 1, a tax law approved by the Texas Legislature in 2006.
In 2005, five years into his tenure as governor, Perry created the bi-partisan Texas Tax Reform Commission, which developed the proposal. And the following year, he signed into law the overhaul, intended to reduce property taxes paid to local school districts.
The overhaul did decrease a portion of the state’s school tax rate. It effectively lowered the maintenance and operation segment of the school tax, which makes up most of the school taxes, from $1.50 to $1.00 per $100 of assessed property value. That number met Perry’s claim of a one-third cut. But it didn’t translate to 33 percent lower bills for taxpayers, which is what we think most voters would infer from the claim.
In 2007, the first year the tax changes were fully implemented, the total amount of tax dollars paid to local schools, fell about 6.4 percent from levels in 2005, before the tax overhaul, according to the state Comptroller’s office. Yet, when including county, city and school taxes, among others, the total amount of taxes paid increased by about 5 percent from 2005 to 2007, reaching $35.1 billion.
Both the school tax levy and total property taxes continued to rise in 2008 and 2009. The amount of total tax dollars paid reached $40 billion in 2009. But the school and total taxes took a nose dive last year.
In 2010, the most recent data available, school taxes dropped about 1 percent to $21.6 billion, but that number is 6.8 percent higher than 2005, before the tax overhaul was implemented.
Total property tax dollars dropped back to $33.7 billion in 2010, roughly even to the $33.5 billion paid in 2005. Adjusting for inflation, however, the total amount of taxes collected fell by 9 percent, which is a little closer to Perry’s statement.
Still, these numbers don’t show the picture of tax relief that Perry paints on the campaign trail. Nor do they tell the full story either, according to Texas policy analysts.
Much of the tax increase can be attributed to factors including population growth and rising property values, analysts said. And voters and local school districts have contributed, as well, electing to restore higher local tax rates to better fund schools, according to Dick Lavine, a senior analyst with the Center for Public Policy Priorities, a left-leaning think tank in Austin, Texas.
The 2006 overhaul legislation left room for local school boards for a one-time restoration of up to 4 cents to the operations and maintenance tax without an election. Voters could return up to 17 cents to the tax rate, Lavine said.
"The vast majority (added to the rate) almost immediately," he said. "About a quarter are now at $1.17. They’re back in the same situation they were before."
From the beginning, these factors have clouded some of the impact the overhaul has had on the state’s taxpayers, other analysts suggest.
The tax reform may not have lowered homeowners’ property tax bills, but, in 2007, it did shave $7 billion off what Texans would have paid without the rate cut, according to the Texas Taxpayers and Research Association, an Austin-based business group.
"That means the average Texan’s total property tax bill in 2007 was 20 percent lower than what it likely would have been had there been no tax relief initiative," the association wrote in its 2008 report "Property Tax Relief: The $7 Billion Reality." The group said that number was a "rough" estimate.
"I don't think there's any question, it represented a net tax decrease for the state of Texas." echoed Joshua Trevino, a spokesman for the Texas Public Policy Foundation, a right-leaning free market group. "I don’t think that’s in question."
Perry was correct if you only look at school tax rate, but his comment referred to all property taxes. If you look at total property tax revenue, Texans paid about the same amount in 2010 as they did in 2005. If you adjust for inflation, he's closer (it's about 9 percent less) but it's still far short of one-third. We find his claim Mostly False.
Texas Legislature, House Bill 1, 2006
Texas Comptroller of Public Accounts, Annual Property Tax Report Tax Year 2009, 2011
Texas Taxpayers and Research Association, "Property Tax Relief: The $7 Billion Reality," 2008
E-mail interview with R.J. DeSilva, spokesperson for the Texas Comptroller of Public Accounts, October 20, 2011
Interview with Dick Lavine, senior fiscal policy analyst for the Center for Public Policy Priorities, October 20, 2011
Interview with Joshua Trevino, spokesperson for the Texas Public Policy Foundation, October 20, 2011
Interview with Howard Gleckman, consultant for the Urban Institute, October 20, 2011
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