Property tax cuts set to head to Texas voters on ballot. Here’s how much you could save
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A package of property tax relief measures is poised to head to Texas voters in November.
For months, lawmakers have feuded over what to do with property taxes. They agreed property tax cuts were needed. Less unanimous was the best way to pass savings on to Texans.
Two bills making up the compromise proposal are headed to Gov. Greg Abbott’s desk and a constitutional amendment enacting the polices are headed to voters, after passage in the House and Senate.
“The passage of this $18 billion package is a testament to the unwavering commitment of Texas leaders to address the concerns of taxpayers and provide significant relief from the burden of escalating property taxes,” House Speaker Dade Phelan said in a Thursday statement.
The property tax deal includes five main components, divided over two bills and a constitutional amendment.
More than $12 billion to reduce school district property tax rates by 10.7 cents.
Increasing the homestead exemption for school district taxes from $40,000 to $100,000.
A 20% cap on appraisal increases for non-homestead residential and commercial properties valued at or below $5 million. The proposal is part of a three-year pilot project.
Savings on franchise taxes for small businesses.
New elected positions on local appraisal boards in counties with a population of 75,000 or more.
“This is the best bill of them all,” Lt. Gov, Dan Patrick said, speaking to the various iterations of proposals.
In a Thursday evening statement, Abbott said he plans to sign the bills going to his desk.
“I thank my partners in the Texas Legislature for coming together to honor the best interests of hardworking Texans who want to own their property — not rent it from the government,” Abbott said.
How much tax cut could save you
The average total school tax rate would drop to .93 cents under the plan, according to estimates from Texas Taxpayers and Research Association. That translates to a savings of $1,209 on a $350,000 home with the $100,000 homestead exemption. But if that home value increased by 10% or more this year, the savings would be $884.
The new rate means a school tax bill of $2,325 with the homestead exemption, according to the association, or $2,651 if the value increased by 10% or more.
“The winners today weren’t the members of the Legislature, the winners today were every property taxpayer in the state of Texas,” said Rep. Craig Goldman, a Fort Worth Republican who chairs the House Republican caucus.
The proposal was announced on Monday after a stalemate between the House and Senate that spanned a regular legislative session, a special session and part of a second special session.
The House passed a bill during the first special session that proposed relief solely by using state dollars to fund schools so they can cut rates, fitting within the confines of Abbott’s special session call. Phelan had also expressed support for capping appraisals for all business types, but that measure wasn’t in that session’s bill.
The House adjourned, but the Senate remained gaveled in. Patrick repeatedly said the Senate wouldn’t budge on increasing the homestead exemption for school district property taxes, and after passing two proposals of their own, the session ended with no deal. The current special session began just hours after the first ended on June 27.
Lawmakers debate property tax deal
Much of the debate in the House Thursday focused on Senate Bill 2. The bill contains the bulk of the tax cut proposals, passing unanimously in the Senate and 133-4 in the House.
Senate Bill 3 expands the state’s franchise tax exemption to more businesses and eliminates an administrative requirement for business owners that don’t owe franchise taxes.
“We’re really, in the spirit of what we began this session with — focusing on not only taking care of the importance of homeowners who are living paycheck to paycheck, but taking care of small business,” said Sen. Tan Parker, a Flower Mound Republican and co-author on the bill. “That’s really the engine of economic growth for our state of Texas.”
It too passed unanimously in the Senate and on a 131-5 vote in the House.
The constitutional amendment by Rep. Will Metcalf, a Conroe Republican, puts several key provisions of tax cut plan up for a vote on the Nov. 7 ballot. It passed unanimously in the Senate and 132-5 in the House.
Eighteen amendments were offered on Senate Bill 2 in the House, mostly by Democrats, but none were adopted. The measure’s House sponsor, Rep. Morgan Meyer, an University Park Republican, noted several times that the bill had already been negotiated, but that other proposals could be looked at in the time ahead of the next legislative session.
Rep. John Bryan, a Dallas Democrat, offered several amendments to Senate Bill 2, including one that would have increased people’s homestead exemption to up to $200,000. He said his proposal would offer meaningful relief, calling the $100,000 exemption “lukewarm to say the least.” Much of the savings will be erased by other mortgage-related costs, he said. The amendment failed on a 51-81 vote.
Rep. Gene Wu, a Houston Democrat, proposed an amendment that would have given qualifying renters a refund payment on a portion of their rent, pushing back against the idea that landlords would pass relief on to renters by reducing rent. It failed 51-82.
“I know most of you here, at least quietly to yourselves, don’t believe that,” Wu said.
Rep. Brian Harrison, a Midlothian Republican, offered an amendment that had the support of Rep. Nate Schatzline, a Fort Worth Republican, and Rep. Tony Tinderholt, an Arlington Republican. The proposal would have helped to fund the further reduction of school Maintenance and Operation property tax rates.
“Proud to file this amendment, and grateful for these conservative coauthors,” Harrison said in a tweet. “We must end property taxes in Texas. We must start now.”
Package doesn’t include teacher pay bump
Other proposed amendments by Bryant, which were pulled down after being challenged under a procedural rule, would have increased how much districts get per student by $1,000, which could help fund teacher pay raises.
“Texas Democrats fought hard for the millions of Texans who rent, who are teachers, and who send their children to public schools but they were entirely neglected in the process by Republican leadership,” leaders of the Texas House Democratic Caucus, Mexican American Legislative Caucus and Texas Legislative Black Caucus said in a joint statement. “As proposed today, the property tax package had billions of dollars for boardrooms but nothing for classrooms.”
San Antonio Democrat Sen. Roland Gutierrez during a Senate debate on Wednesday raised concerns about the constitutional amendment not including more money for teachers. An amendment by the San Antonio Democrat passed on an earlier Senate property tax proposal that included teacher bonuses of at least $2,000.
“Without speaking for them, I think the intent is clear that they wish that issues to be brought up in the next special session with education,” said Houston Republican Sen. Paul Bettencourt, after Gutierrez asked who removed the provision in the House.
On Thursday, Gutierrez again said the stipend should be added to the constitutional amendment, proposing the change to the bill on the floor, but it was found not germane.
Lawmakers are expected to return for another special session later this year, where pay bumps for teachers could be addressed. Abbott calls special sessions and sets the agenda.
Goldman said that session will likely be in October.
“Everyone has talked about, let’s get there in October and see what we can come up with, with a plan that will give sustainable teacher pay raises to the teachers across the state of Texas,” he said.
