On Monday, the House Ways and Means Committee laid out House Bill 2, the House leadership’s property tax relief package. The legislation is authored by the chairman of the committee State Rep. Morgan Meyer (R-Dallas/Career Fiscal Index “F”). The legislation attempts to do a few things for taxpayers such as adding 15 cents in compression to school M&O property taxes, which would lower the average taxpayer’s property tax bill by $460 in 2024 according to the author. It also proposes to reduce the appraisal cap on all real property from 10% to 5%.
This is a significant change to the way appraisals work. Currently, only homesteaded homes are capped at 10% growth. HB 2 seeks to expand caps to all real property and place the cap at 5%. Although this seems like a good idea on the surface, it would have terrible ramifications for taxpayers, as it would ultimately drive up tax rates as local governments scramble to get the same amount of income they had the previous tax year. Even the fiscal analysis provided by the Legislative Budget Board (LBB) states this fact.
The testimony overwhelmingly echoed this as the vast majority of individuals and organizations supported the compression of tax rates while rejecting appraisal caps as an inequitable and generally destructive idea. Many urged the committee not to pass out this bill as it would do irreparable harm to the tax system that likely could not be undone. Texans for Fiscal Responsibility (TFR) pulled a sample of such testimony, which is shown below.
TFR maintains that compression is the best way to reduce property taxes, and as we have laid out in our Texas Prosperity Plan, it is also the best way to eliminate school property taxes altogether. TFR’s President Tim Hardin also gave testimony at the hearing and commended the committee on the effort to compress rates; he also reminded them that the bill does nothing to restore the property rights of Texans, and urged them to put us on a path toward elimination.
HB 2 was left pending in committee, but we expect that it will come up for a vote in the next week. The question is: Will the committee reject the majority testimony and keep the bill in its same form, or will it listen and remove appraisal caps and add more compression?
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