Texas House, Senate advance $18B property tax package, adjourn special session sine die

A monthslong effort to advance property tax relief came to fruition on Thursday as both the Texas House and Senate adjourned the second special session of the year sine die after passing legislation meant to drive down local tax rates and help homeowners pay less on their properties.

Billed as the "biggest property tax cut in Texas history," the $18 billion package sent from the Legislature to Gov. Greg Abbott for final approval would raise the state's homestead exemption to $100,000, exempt certain businesses from paying a franchise tax and create a pilot program set to limit property appraisal value increases.

The omnibus relief plan, which dedicates more than $12 billion to compress, or lower, school property tax rates, gained steam on Monday after Lt. Gov. Dan Patrick and House Speaker Dade Phelan, R-Beaumont, announced that a deal had been struck between the two chambers.

That revelation quickened the pace of the property tax discussion in the Capitol that had dragged on, often including bickering on social media, through both special sessions and throughout the entire regular session that ended May 29.

"To get to the possibility one day of reducing school property taxes for everyone to a very small number is the combination of compression and homestead exemption," said Patrick, the Senate's leader, thanking members of both chambers for reaching an agreement as the bills were passed unanimously from the Senate on Wednesday. "That is the key that is proven out in this legislation."

On Thursday, the House then passed the same legislation after hours of debate and many rejected amendments, sending Senate Bill 2, on a 133-4 vote, and Senate Bill 3, on a 131-5 vote, to Abbott's desk to be signed into law.

"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 in a statement following the passage of the tax plan. "I look forward to signing this legislation into law to provide Texans with the largest property tax cut in Texas history.”

What's in the legislation?

House Joint Resolution 2, which allows for changes to the state Constitution as warranted by the property tax plan if approved by voters in November, was also passed nearly unanimously in each chamber Thursday.

"Coming into the session with a $34 billion surplus, we knew this would be the most contentious issue that we face is how to return these dollars to taxpayers," Phelan said, thanking House members, staff and colleagues in the Senate.

"With that being said, congratulations to you, but, more importantly, congratulations to the taxpayers in Texas — they're the big winners today," he said.

Sen. Paul Bettencourt, R-Houston, the chief property tax architect in the Senate throughout the legislative process, lauded the agreement that represents a compromise between the Senate's preferred homestead exemption and the House's preference of appraisal caps.

While laying out the bill on the Senate floor Wednesday after the Senate Committee on Finance met and quickly pushed the legislation back to the whole Senate for consideration, Bettencourt said homeowners under 65 could see $1,300 in tax savings per year with disabled homeowners and those over 65 seeing a possible $1,450.

More: The Texas Legislature's 2023 property tax plan: Here's what you need to know

"And that's the most powerful thing you can do as a tax writer is to exempt something from taxation," Bettencourt said. "And it's a fantastic recognition of the obvious: that we need to do everything we can to promote homeownership in Texas."

In addition to compression and the homestead exemption, the new agreement would give a tax break to commercial, residential and nonhomesteaded properties through a 20% "circuit breaker" on real property valued at less than $5 million.

That means that their appraised value cannot increase by more than 20%. This is considered a pilot program that comes up for renewal after three years.

The legislation also creates three new, nonpartisan elected positions on county appraisal district boards in counties with a population of 75,000 or more, with elections scheduled for next May.

Further, the package exempts from taxes businesses that owe $1,000 or less in taxes or that make $2.47 million in taxable revenue.

Attempts to raise teacher pay, other amendments fail

Despite praise from both Republican and Democratic lawmakers, the property tax plan did receive pushback throughout the week after provisions introduced to create a teacher pay raise were not included in the final plan.

Sen. Roland Gutierrez, D-San Antonio, who brought the Senate amendment that would have created a pay bump for teachers over the next two years, was irritated that the measure did not gain traction in the lower chamber.

"I just wonder which one of those two people decided to abandon the teachers of Texas and not give them a pay raise," Gutierrez said, voicing frustration toward the House leadership team.

Patrick shot back from the dais, saying the question from Gutierrez was inappropriate.

In the House, 20 Democrats signed onto a letter Tuesday that expressed disdain for the Legislature's inability to utilize the budget surplus to further school funding and increase teacher pay during the session.

"While the Governor's special session call exclusively focuses on cutting school district property tax rates, it is critical that funding our public schools is addressed within the same policy framework (as the Senate has done.) This is not only practical - funding our public schools is an essential basis for why we have property taxes in the first place," reads part of the House Democrats' statement.

As the property tax bills were on the House floor Thursday afternoon, Rep. John Bryant, D-Dallas, tried to introduce several amendments to SB 3. Each attempt was thwarted by legislative maneuvering, called a point of order, by Republicans.

Eventually, after hours of trying, Bryant was able to present on the floor a property tax package that House Democrats introduced last week that would allow a homestead exemption of $100,000 or an amount equivalent to 25% of their home's value — though that exemption would be capped at $200,000 — whichever figure results in the higher savings.

"This is how we protect homeowners from being taxed out of their homes," Bryant said before the amendment was voted down, 51-79.

Rep. Morgan Meyer, R-Dallas, a leading member of the House property tax team, advocated against raising the exemption and favored the more modest approach. He argued that the changes would upend the agreement with the Senate and further delay the implementation of a property tax plan.

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As the debate continued into the evening, measures to extend relief to renters, clerical changes to the existing proposal and overhauls to include more funding for education continued to crop up. None of the amendments advanced and the proposals as introduced earlier in the week passed on wide margins.

Lawmakers also punted on teacher pay raise questions, saying that the issue could be addressed in another special session to advance school choice legislation later this year, which Abbott has threatened for months.

The specifics of the future call are unclear, but a called session is expected sometime this fall.

This article originally appeared on Austin American-Statesman: Texas House, Senate advance $18B property tax relief package