After ongoing debates, a proposed $18 billion property tax deal was announced in a joint statement shared by House Speaker Dade Phelan and Lieutenant Governor Dan Patrick early Monday morning.
The new plan will provide $12 billion to reduce school property tax rates for all homeowners and businesses properties, franchise tax cuts for small businesses, and the increase the homestead exemption from $40,000 to $100,000 as Patrick backed throughout negotiations.
The proposed measure also includes relief for non-homestead properties valued at $5 million and under, including residential and commercial properties that will receive a 20 percent “circuit breaker” on appraised values. The circuit breaker program will be a part of a three-year pilot project that will reduce property taxes that exceed this percentage of a person’s income.
The legislation will be filed Monday and is expected to pass in both chambers later this week. The proposal will also create newly elected positions on local appraisal boards.
Phelan and Patrick met last week, with other members of the House and Senate as well, to agree on how best to give property tax relief to Texans. Negotiations extended past the regular session and the first special session — resulting in a second special session.
Throughout conversations, the speaker and lieutenant governor have remained at odds over how to deliver property tax cuts. Patrick continued to support his priority of increasing the homestead exemption, while Phelan originally wanted to lower the state’s appraisal cap.
In his first special session call, Governor Greg Abbott then suggested the lawmakers pass a plan that included tax compression only – sending state dollars to school districts to lower property tax rates. Phelan quickly took up Abbott’s proposal, leaving the House and the Senate at odds of who would compromise first.
The property tax relief and franchise tax relief bills will originate in the Senate, and the constitutional amendment will be introduced as a House Joint Resolution. Both chambers are scheduled to reconvene on Tuesday, with the House meeting at 2 p.m. and the Senate at 3 p.m.
Abbott’s statement on the proposed property tax cut legislation:
I promised during my campaign that the state would return to property taxpayers at least half of the largest budget surplus we have ever had. Today’s agreement between the House and the Senate is a step toward delivering on that promise. I look forward to this legislation reaching my desk, so I can sign into law the largest property tax cut in Texas history.
This story is developing and will be updated.
Update 8 p.m.
The corresponding property tax relief, franchise tax relief and constitutional amendment legislation that make up the new property tax relief plan was filed late Monday afternoon.
Senator Paul Bettencourt (R-Houston) authored both Senate Bill 2 and Senate Bill 3. SB 2 outlines providing property tax cuts through tax compression, increasing the homestead exemption and limiting appraisals and taxes. The legislation also creates new roles on local appraisal boards.
Senate Bill 3 lays out the franchise tax exemptions on small businesses. According to Bettencourt, around 67,000 businesses won’t have to pay their franchise taxes. This measure will also eliminate a “nuisance tax” for 1.7 million taxpayers filing the no-tax-due forms for franchise taxes.
House Joint Resolution 2, filed alongside these two Senate bills, is the constitutional amendment that may appear on voters’ ballots in November to authorize the increase of the homestead exemption from $40,000 to $100,000.
Bettencourt took to Twitter and said the average Texas homeowner would save 41.5 percent or about $1,300 per year on property taxes if the entire plan received Governor Greg Abbott’s signature.
Although this marks an end to the deliberation between House Speaker Dade Phelan and Lieutenant Governor Dan Patrick, the distribution of this relief remains in question. A new inclusion to the deal struck between the two lawmakers was a “circuit breaker” program which usually calculates property taxes based on a person’s income or what they have available to pay. However, the program included in this proposal does not have an income component. Some of the public is concerned that lower-income households will not benefit as much from property tax cuts because of this.
And despite requests to deliver property tax cuts to renters, there were no targeted efforts to provide this relief directly in the final legislation.
Abbott adjusted the second special session call to fit the proposed plan as he awaits its expected passage in both chambers. The House Ways and Means Committee will convene at 12:15 p.m. on Tuesday to discuss these bills. The full House and Senate will meet later Tuesday at 2 p.m. and 3 p.m., respectively.
This article appears in Jan 1 – Dec 31, 2023.
