Harvey and the resilience of Texas and its REALTORS® was a theme echoed throughout the first day of the 2017 Texas REALTORS® Conference at the Hilton Anatole in Dallas. Speakers and leaders made time to recognize the generosity of Texas REALTORS®—with their time and gifts to the Texas REALTORS® Relief Fund—and acknowledge the loss and difficulty felt by many colleagues and clients hit by Hurricane Harvey.
Opening Session showcases strength of Texas REALTORS®
The invocation for the Opening Session, led by Kenya Burrell, a TAR vice president for Region 14 (Houston), included a moment of silence for those affected by Harvey. TAR Chairman Vicki Fullerton followed by detailing the impact the Texas REALTORS® Relief Fund has had already—with more than $1 million of assistance distributed so far—and how REALTORS® have been working to help in their communities. The Texas REALTORS® Relief Fund continues to accept contributions at texasrealestate.com/relief as applications for assistance are being processed.
At the Opening Session, legendary football coach Lou Holtz delivered a keynote address that was enthusiastically received by attendees. Weaving in jokes and personal anecdotes, Holtz shared the message that the keys to success in life are to make good choices, do everything to the best of your ability, and show people you care. He commended Texas REALTORS® for their role of making people’s transitions in life easier.
Why fixing school finance is so difficult
The school finance system in Texas has lurched from court-ordered fix to court-ordered fix until the latest ruling from the Texas Supreme Court said it was constitutional, if deeply flawed. At the Public Policy Forum on Friday afternoon, Texas Senate Education Committee Chairman Larry Taylor and House Education Committee member Lance Gooden took part in a discussion, moderated by former Texas Senate Education Chairman Florence Shapiro, about why fixing the state’s school finance system has proven so difficult.
Taylor explained that the current system traces back to 1940 and has gone through successive revisions since, like a cabin built over 70 years by different people. “If we’re going to be the state we are today, which I believe is a world leader, we’ve got to make changes in education,” Taylor said. Instead of continuing to tweak the current system, Shapiro said, it should all be tossed out and the state should start over from a blank slate.
The 85th Texas Legislature passed a law requiring the state to form a 13-member commission to study the school finance system and recommend improvements. Gooden said he hopes the commission finds a solution but knows it will be difficult.
Texas REALTORS® shouldn’t become experts on the current system, Taylor said, because we need a full overhaul. REALTORS® would best help the commission by communicating with legislators about what Texas should work toward—regardless of how the system looks today.
What’s the potential impact of tax reform?
William Mellor, of Angelou Economics, opened the Public Policy Forum by giving an economic analysis of the impacts on Texas of the federal tax reform Blueprint. The one-page Blueprint doesn’t include many details, but based on what we know so far, Texas could expect an overall fiscal benefit of $830 million. However, because of the way that benefit would be distributed, the economic impacts would amount to a $3.435 billion loss for Texas. Of the $830 million in tax relief, 47% would go to the wealthiest 5% of households, while 43% of the tax hikes will fall on the lowest 50% percent of earners.
The analysis also looked at the break-even price for a home in Texas: the home price at which a homeowner will see enough benefit from tax deductions to choose to itemize deductions. Under the Blueprint, which calls for eliminating the deduction for local property taxes while keeping the mortgage interest deduction, the break-even home price for Texans would be about three times higher for both individuals and married couples. Texans utilize the local property tax deduction much more than the mortgage interest deduction, according to the analysis. The reform endorsed by the Blueprint would price most Texans out of the benefits of itemizing tax deductions.
After Harvey, all bets are off for the Texas economy
Texas A&M Real Estate Center Chief Economist Jim Gaines had a list of economic predictions for the coming year prepared, but after Harvey they may still come true or they may not. As Gaines’ second slide admonished, all bets are off. What is for certain, Gaines said, is that survey data about how Texans feel about the economy is on the rise across the board. Empirical measures of the Texas economy don’t look quite as rosy. “It’s not that they’re bad,” he said. “It’s just that they’re not quite as good.”
After the down year of 2016, this year was poised to be a recovery year for the Texas economy, but now 2018 could either be a really great year or a potentially challenging one. The good news is there was no long-term damage to basic economic infrastructure from Harvey, but estimates of the economic costs range between $60 billion and $190 billion.
Statewide, job growth is picking up again, pushing up population growth and putting more strain on state and local resources, according to Gaines.