AUSTIN (AP) – Texas property values increased 1.3 percent statewide last year, the comptroller’s office says, in another sign the economy is getting stronger.

The assessed value of all residential and commercial property across the state increased to $1.69 trillion in 2011, compared to the previous year’s $1.67 trillion. In 2010, Texas suffered the first decline in statewide property values in 17 years, and state budget writers had anticipated another 1 percent decrease last year — but 2011 was more positive than expected, the Austin American-Statesman reported Tuesday.

The assessed value is a key variable in school funding, which is based on a mix of local property taxes and state dollars. The difference will save the state perhaps $300 million to $400 million by reducing its obligation to school districts, according to Joe Wisnoski of Moak Casey & Associates, a school finance consulting firm.

Still, the increase is relatively insignificant in relation to Texas’ overall two-year budget of $173.5 billion — and it won’t necessarily be used to undo some of the $4 billion reduction in school aid that the Legislature enacted last year.

“It probably will make very, very little difference in the bottom line of school districts,” Wisnoski told the Statesman.

But the increase in property values, combined with the state’s collection of more tax revenue than previously expected, adds to the perception that Texas is climbing out of its budget hole.

“We’re certainly above the trend line across the board, but it’s still early,” said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association. “If current trends hold, we will be in relatively good shape.”

Since the state’s fiscal year began in September, sales tax revenue has come in about double the projected rate of growth.

Other key sources of revenue have performed exceedingly well, particularly the natural gas production tax, which is expected to be up 25 percent compared with the previous budget. Much of that money goes to the state’s Rainy Day Fund, which is expected to have $7.3 billion available by the end of the two-year budget.

Texas Comptroller Susan Combs said in December that the state would have $1.6 billion more than previously expected in the 2012-13 budget.

But she also warned that legislators would likely have to tap the Rainy Day Fund when they convene again next year given that they left $4.3 billion in Medicaid obligations unpaid during last year’s session.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Also Check Out:

More From CBS Dallas / Fort Worth

Drip Pan: CBS Local App
Drip Pan: Weather App

Watch & Listen LIVE