Round 2 of Property Tax Relief Showdown Begins in Texas Legislature
June 30, 2023 | Austin, TX
Round two of the property tax relief battle began on June 27, as the Texas Legislature was called back into another special session by Governor Greg Abbott.
In special session #1, House Speaker Dade Phelan closed the House after passing HB 1, refusing to consider the Senate’s version, SB 1.
The House bill would have achieved property tax relief through rate compression only. The Senate version would have achieved relief through a combination of lower rates and a rise in the homestead exemption from $40k to $100k. Rate compression would extend to both residents and businesses, but could be adjusted again at any future legislative session. Homestead exemptions are permanent.
Special Session #2 Proclamation
The second special session call by Governor Greg Abbott seems to follow along the lines of Speaker Phelan’s legislation, allowing only bills that achieve tax relief by tax rate compression or bills that would eliminate property taxes altogether.
The second special session proclamation includes:
ELIMINATING A PROPERTY TAX IN TEXAS: Legislation to put Texas on a pathway to eliminate school district maintenance and operations property taxes.
LASTING PROPERTY TAX RATE CUTS: Legislation to cut property tax rates solely by reducing the school district maximum compressed tax rate in order to provide lasting property-tax relief for Texas taxpayers.
Statement from Governor Abbott
“I am bringing the Texas Legislature back for special session #2 to provide lasting property tax cuts for Texans. During the five-month regular session, the Texas House and Texas Senate both agreed on cutting school district property tax rates, while the House wanted to add appraisal caps and the Senate advocated for increased homestead exemptions.
“Unless and until the House and Senate agree on a different proposal to provide property tax cuts, I will continue to call for lasting property tax cuts through rate reductions and working toward eliminating the school property tax in Texas. Special sessions will continue to focus on only property tax cuts until property tax cut legislation reaches my desk.”
Response from Lt. Gov. Dan Patrick
The Lt. Governor responded by announcing that the Senate will pass the same bill that they passed during the first special session.
“We will insist upon a homestead exemption, giving homeowners a $1,250 to $1,450 annual tax cut as opposed to receiving only $740 without a homestead exemption,” he said, adding that the bill passed by the Senate would give homeowners a $1,250 to $1,450 annual tax cut as opposed to receiving only $740 without a homestead exemption.
“Regarding the call to pass legislation to eliminate school property taxes all together, to do so would require increasing the sales tax dramatically, which clearly has no support from the legislature or the people,” he explained. “The only other pathway is using current sales tax dollars, which can never be achieved.
“The Governor mentions that cutting the tax rate is a lasting tax cut. It is not. As soon as sales tax flattens or declines in any year, property tax rates would skyrocket. The only tax cut that is lasting is a homestead exemption, which is locked into the Texas Constitution.”
Speaker of the House Dade Phelan made no public comment.
Senate Passes SB 1
SB 1 (Special Session 2) by Senator Paul Bettencourt, passed the Senate on June 28. The bill includes a combination of tax compression and a $100k homestead exemption provision, which would provide $22 billion in property tax relief for homeowners. The bill was sent to the House for consideration earlier today.
However, the call for special session #2 by Governor Abbott specified that only tax compression approaches should be considered. In the first special session, Speaker Phelan refused to send a similar Senate bill to committee, having passed a version relying on tax compression and then swiftly adjourning the House and sending home legislators. The two chambers were at an impasse and nothing was resolved.
After the Senate passed its bill, Lt. Governor Patrick commented that he had reached out to Speaker Phelan and said they should meet to resolve their conflicts this time and he indicated that Phelan had not rejected the idea.
Teacher Bonus Amendment
Before they passed their version of property tax relief, the Texas Senate added a little something that will no doubt make the bill harder for politicians to vote against.
Democrat Senator Roland Guittierez proposed the amendment to add $2,000 in supplemental pay to teachers in urban school districts and $6,000 to rural districts, which is estimated will cost $3.2 billion. After an hour of discussion, the amendment received a unanimous vote, as did the property tax relief bill.
Read Texas Scorecard’s take on the amendment here.
Texas House Bills
Texas House members also filed several bills aimed at reducing or eliminating property taxes. You can read Texas Scorecard’s article that details the bills filed in the House on property tax relief.
HB 1 (Special Session 2) passed out of the House Ways & Means Committee on June 28. The bill is described as “relating to a reduction in the maximum compressed tax rate of a school district and additional state aid for certain school districts impacted by compression.”
Sen. Brandon Creighton (Dist. 4)
(512) 463-0104 (Austin Office)
(281) 292-4128 (District Office)
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Senator Paul Bettencourt (Dist. 7)
(512) 463-0107 (Austin Office)
(713) 464-0282 (District Office)
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Sen. Lois Kolkhorst (Dist. 18)
(512) 463-0118 (Austin Office)
(979) 251-7888 (District Office)
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Rep. Cecil Bell (Dist. 3)
(512) 463-0650 (Austin office)
(281) 259-3700 (District office)
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Rep. Steve Toth (Dist. 15)
(512) 463-0797 (Austin office)
(346) 220-0300 (District office)
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Rep. Will Metcalf (Dist. 16)
(512) 463-0726 (Austin office)
(936) 539-0068 (District office)
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Rep. Ernest Bailes (Dist. 18)
(512) 463-0570 (Austin office)
(936) 628-6687 (District office)
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