As home prices climb, Texas property taxes soar, says Dallas Fed’s Southwest Economy

For Immediate Release: September 21, 2018

DALLAS—Texas property taxes have increased notably in recent years, propelled higher by both tax rate changes and rapidly rising home prices, according to the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.

“The increase has created a sense that the total state and local tax burden in Texas is no longer competitive with taxes in other states, even as the total burden today remains well below the national average,” writes Jason Saving in “Texas Property Taxes Soar as Homeowners Confront Rising Values.”
While soaring appraisals have led to public outrage, there are limited ways to rein in property taxes because local jurisdictions provide a wide variety of services—including public education—that elsewhere are state responsibilities, according to Saving.

“In Texas, local governments receive only 23 percent of their revenue from the state; in only six other states do localities receive a smaller percentage. The U.S. average is 30 percent,” Saving writes. “Buffeted by the combination of more responsibility and less state support, the local tax burden in Texas is relatively high.”

In “New Technology Boosts Texas Firms’ Output, Alters Worker Mix,” Emily Kerr, Pia Orrenius and Christopher Slijk look at how technological change is affecting state businesses, based on responses to the Dallas Fed’s Texas Business Outlook Surveys.

Artificial intelligence tops the list of technologies firms plan to adopt within the next three years, followed by 3-D scanning, biometric authentication, blockchain and 3-D printing. Increasing productivity is the main reason for adopting new technology, cited by two-thirds of firms surveyed. However, firms are not necessarily looking to replace workers with technology, according to the authors.

“The Dallas Fed survey next asked how adoption of new technology will affect firm employment over the next five years,” the authors write. “Interestingly, technology is not expected to replace workers on net. Only 14 percent of firms said technology adoption will decrease their need for workers, and a similar share said it will actually increase their need for workers.”

Turning to education, the rising cost of college has led many parents to take out loans to help their children make ends meet, write Wenhua Di, Carla Fletcher and Jeff Webster in “Parental Borrowing for College Comes with Repayment Issues.” Loans through the federal Parent Loan for Undergraduate Students (PLUS) program make up an increasing proportion of federal aid to students and their families. While the default rate remains low, parent borrowers present their own benefits and risks, according to the authors.

“Parent borrowers tend to have more experience dealing with debt and more realistic expectations for repayment than students,” the authors write. “At the same time, parents say taking on loans for their children may affect their ability to save for retirement and undertake major purchases.”

Also in this issue, Southwest Economy goes “On the Record” with Dallas Fed senior vice president and research advisor Mine Yücel who discusses how the shale boom has created renewed excitement in the energy industry. In the “Spotlight” feature, Kunal Patel and Grant Strickler explain how shale oil has helped propel U.S. crude oil exports since Congress lifted the export ban in 2015. Finally, the latest “Go Figure” infographic explores how the state’s economy would stack up if Texas were a country.

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Media contact:
James Hoard
Federal Reserve Bank of Dallas
Phone: (214) 922-5307
E-mail: james.hoard@dal.frb.org