A Texas House committee debated eliminating property taxes Tuesday, Sept. 15, a move that would erase League City's $48.8 million in annual tax revenue.
The House Ways and Means Committee heard hours of testimony on replacing all property taxes with a sales tax, expanding homestead exemptions and other relief options, ABC13 reported. The hearing laid groundwork for the legislative session that begins in January 2027.
Scrapping property taxes entirely would require the state sales tax rate to climb to nearly 20%, according to an August 2024 Texas Taxpayers and Research Association analysis cited at the hearing. Texas currently charges 6.25% in state sales tax.
What League City stands to lose or gain
League City Council unanimously adopted a tax rate of $0.356505 per $100 valuation on Sept. 8, the city's 12th consecutive rate cut. As we reported Sept. 14, the median homeowner with a $375,000 taxable value pays about $1,337 a year in city property taxes.
That revenue funds roughly 84% of the city's General Fund, according to budget documents presented at the Aug. 11 budget workshop. Eliminating property taxes would force the city to find a replacement for that money or cut services.
Public schools face an even larger hole. TEA Commissioner Mike Morath told the committee that Texas schools rely on nearly $30 billion in property taxes.
Exemptions already shrinking school bills
Lawmakers also examined how fast homestead exemptions have grown. The school district homestead exemption stood at $25,000 a decade ago, according to the state comptroller's office. Texas voters raised it to $140,000 when they approved Proposition 13 on Nov. 4, 2025, by a nearly 4-to-1 margin.
That growth means about one in 10 homeowners under 65 now pay zero school property taxes. Among homeowners 65 and older, the figure is one in three, according to testimony at the hearing.
The exemption applies only to the school district portion of a tax bill. City and county taxes are calculated separately.
Lawmakers split on approach
State Rep. Cody Vasut, a Republican from Angleton, pushed for replacing property taxes with a consumption tax. "It seems to me that if we were to eliminate anything, we would eliminate a property tax, using a sales tax and not the other way around," Vasut said at the hearing.
State Rep. Vincent Perez, a Democrat from El Paso, raised concerns about renters, who do not directly benefit from homestead exemptions. Perez said property tax savings are virtually never passed on to tenants and called the situation an "affordability crisis" for that segment of the population.
No legislation was introduced. Lawmakers said the hearing would help shape bills before the session opens in January 2027.
