By Patricia Kilday Hart
March 17, 2013
Twenty years ago, the Sunday front page of the Houston Chronicle reported that in Harris County "a dozen posh country clubs are receiving a special tax break that allows the exclusive clubs to avoid paying almost $1.6 million in property taxes each year."
Chief among them was the River Oaks Country Club, whose well-tended golf course is the playground of Houston's elite. Nestled next to downtown, that property was taxed at a fraction of its market value.
Nothing has changed in the subsequent two decades, except the lost tax income - at a time when the Houston Independent School District is considering a tax hike - now exceeds $4.5 million annually.


"I was shocked and appalled," state Sen. Rodney Ellis, D-Houston, said of research by his staff showing that 22 Harris County country clubs now claim the exemption. "It can't be justified."



'Sunset' review
The Houston lawmaker says the long-standing tax break, adopted by the Legislature in the late 1970s with the intent of preserving recreational green space for the public, demonstrates the need for his legislation that would force a "sunset" review of all tax exemptions on the books in Texas.
"I'm not singling out country clubs," he said. Most exemptions on the books have not been reviewed for decades, he noted: "I want to see if there is a good public policy for these exemptions to exist."
His concern is shared by Rep. Mike Villarreal, D-San Antonio, who would put a 10-year limit on tax breaks and establish a Select Commission on Periodic Tax Preference Review to examine each exemption.
The Legislature, Villarreal noted, scrubs the budget "every two years to determine which programs to continue funding instead of committing expenditures in perpetuity."
In the same spirit, he suggested that the Legislature continually review exemptions.
"Tax exemptions should not be on autopilot," he said. "It's time to stop treating tax exemptions as entitlements."
Rep. Harvey Hilderbran, R-Kerrville, chairman of the Texas House Ways and Means Committee, said he was not aware of the green space exemption benefit to country clubs. He also said he favored the periodic review of exemptions. "Those bills will get a hearing," he said of the proposals by Villarreal and Ellis.
Oil and gas tax break
For the past year, Ellis has been exchanging emails with Comptroller Susan Combs to ascertain the potential state income lost to exemptions.
"Texas' tax code is riddled with tax breaks, loopholes and exemptions about which we have little data," he wrote. "We have an astounding deficit of knowledge when it comes to tax breaks. No one knows how many are in the tax code, how much they cost or if they are even working."
Recently, Combs issued a report detailing some $37.7 billion in state revenue lost to exemptions, and another $6 billion in foregone local school tax revenue.
Those numbers include universally popular property tax exemptions for homesteads and sales tax exemptions for groceries.
But they also include a tax break that's saved nearly $1 billion a year in taxes to the oil and gas industry. Called the "high-cost gas exemption," the break was passed before the industry developed economical fracking techniques.