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Dan Patrick's $20,000 tax savings claim proves incorrect, ridiculous

Texas Lt. Gov . Dan Patrick made such a dramatic claim about "must-pass" tax-rate legislation--$20,000 in savings for the average homeowner every year!--we launched a fact check.

Patrick, during 17 minutes of remarks to Capitol reporters May 17, 2017, named Senate Bill 2, authored by Sen. Paul Bettencourt, R-Houston, as one of two measures--along with the Senate-backed proposal barring local governments and school districts from letting transgender residents use bathrooms of choice--that must pass, in Patrick’s view, for lawmakers to avoid one or more special sessions possibly called by Gov. Greg Abbott after the regular session that must end by midnight Memorial Day.

Patrick, mindful the House then had yet to vote on SB 2, said the Senate-approved version of the measure "would bring about the largest property tax reform in Texas history. It would bring local government spending under control, give the voters an automatic election on government spending, of anything over 5 percent, and," Patrick said, "save the average homeowner in Texas $20,000 a year over the next 20 years or so."

Patrick aide: He meant $20,000 cumulatively

Is that correct? To our inquiry, Patrick spokesman Alejandro Garcia said by email that Patrick had intended to tout savings adding up to $20,000 over 20 years. He pointed out a Texas Tribune news story posted two days after Patrick spoke quoting an unnamed Patrick staffer saying the same.

The Tribune story said Patrick provided its reporter with a sheet of figures suggesting $20,856 in cumulative savings to the average homeowner, a conclusion predicated on local tax-rate hikes running higher than usual. The story quoted Dick Lavine, a tax analyst for the liberal Center for Public Policy Priorities, which opposes SB 2, saying: "This calculation certainly does not portray what an ‘average’ homeowner could expect in any given year, to say nothing of experiencing these ‘savings’ every year for the next 20 years."

Bettencourt offers backup

We didn’t draw any backup from Patrick. But Bettencourt replied to our inquiry by offering a chart suggesting escalating savings for what he described as the owner of the median-valued Texas home based, he said, on research by the Texas Taxpayers and Research Association, which drew on data on home sales culled monthly by the Real Estate Center at Texas A&M University:

SOURCE: Chart projecting homeowner savings from Senate-approved version of Senate Bill 2 (received by email from Lauri Saathoff, director of communications, state Sen. Paul Bettencourt, May 17, 2017)

In phone messages, Bettencourt noted that the association’s analysis suggests that over five recent years, through 2015, the owner of a median-valued home saw a nearly 34 percent escalation in property taxes paid to the local government entities targeted by SB 2, which averages out to increases of more than 6 percent a year. Those entities are cities, counties and special districts though not school districts.

How the chart gets to a $22,761 cumulative savings in year 20 figure: It shows first-year savings under SB 2 for the median-value homeowner of $46, second-year property tax savings of $99 with annual savings exceeding $1,100 starting in year 12--and topping $2,100 a year starting in year 17.

Each year’s savings, the chart shows, reflects the difference between what the homeowner would face in local property taxes if all government units raised taxes 8 percent minus what the homeowner would face if the local government entities all raised taxes 5 percent.

Under existing law, local governments may raise effective tax rates up to 8 percent without residents being able to petition for a rollback election. The "effective rate" refers to the rate needed for the governing unit to raise the same total amount of taxes from the same local properties as the unit garnered the year before. Under the Senate’s version of SB 2, any of the affected entities could raise such taxes up to 5 percent with any additional bump automatically touching off a rollback election.

Realistic tax-rate assumptions?

We asked Bettencourt about the basis of the chart’s assumption that local governments will every year across-the-board raise effective tax rates 5 percent and if it’s realistic to compare that to an assumption that such governments would otherwise uniformly be driving up rates 8 percent every year.