News88th TXLege

Legislature Reaches Property Tax Deal

July 11, 2023
Andrew McVeigh
88th Legislative Session, Dade Phelan, Dan Patrick, Greg Abbott, Property Tax
The House and Senate finally reached a property tax relief deal, but is it everything that they claim it to be?

On Monday, leadership in the Texas Legislature finally reached a deal ending the months-long property tax relief stalemate that has pitted Lt. Gov Dan Patrick and the Texas Senate against Governor Abbott, Speaker Dade Phelan (R-Beaumont), and the Texas House. The announcement of the deal came Monday morning as Patrick and Phelan issued joint statements regarding the deal, saying that the two had “reach[ed] a consensus.” 

The new consensus plan comes after the Legislature failed to pass any new property tax relief during the regular session and first called special session.

The Plan

Details of the plan include:

  • roughly $7 billion in school Maintenance & Operation (M&O) tax compression,
  • homesteaded homeowners will receive an increase in their homestead exemption from $40,000 to $100,000,
  • roughly $600 million in increases to franchise tax exceptions for businesses,
  • a three-year pilot program of 20% property tax “circuit breakers” on non-homesteaded properties worth less than $5 million, such as small businesses, and
  • the creation of three elected positions on appraisal review boards in counties of more than 75,000 people.

Finally, while the plan boasts $18 billion in total property tax relief, $5.3 billion of that number is actually old M&O compression that has already been dedicated, making the total new property tax relief $12.7 billion.

The House version of the new consensus plan had already been filed on Monday, and it is expected that the legislation will be passed by both chambers within the coming days.

On Monday, Governor Greg Abbott released a brief statement indicating he would sign the legislation, saying the “agreement between the House and the Senate is a step toward delivering” on his campaign promise to return at least half of the budget surplus to taxpayers. 

Additionally, in an apparent abdication of the governor’s insistence that the legislation focus solely on compression and a path to eliminating school M&O property taxes, the governor quietly changed his second special session call, issuing updated subjects to match the Legislature’s consensus plan instead. 


While the consensus plan will certainly provide some relief to taxpayers, it has some major flaws. 

First, raising the homestead exemption will only provide temporary relief, as inflation and rising appraisals slowly eat away at the savings. 

Secondly, the plan severely curtails the amount of new compression that is applied to school M&O taxes, making it even harder to eventually eliminate the tax altogether.

Finally, the plan fails to provide the largest property tax cut in Texas history and is a far cry from what Texans deserve. The largest property tax cut was in 2008, when $14.2 billion in new property tax relief was provided to taxpayers.

The current plan only provides $12.7 billion in new property tax relief, $1.5 billion short (and that doesn’t even account for inflation, which would require billions more in relief to actually qualify for the biggest in history). The plan also fails to meet the governor’s promise of providing half of the budget surplus back to taxpayers, which would require more than $16.5 billion (not $12.7 billion).

Unfortunately, the Legislature is just treating the illness instead of fixing it and ending the problem. The solution is eliminating property taxes altogether, starting with the school M&O. We will only get there by dedicating a super-majority of our budget surpluses to compressing the tax rates, not perpetuating the problem with relief that is neither adequate nor permanent.

The bottom line is this: While this property tax plan will provide Texas taxpayers some relief, a sizable portion of that relief will be short-lived. Despite repeated claims to the contrary, it is only the second biggest property tax cut in Texas history.

Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!

Get The Fiscal Note, our free weekly roll-up on all the current events that could impact your wallet. Subscribe today!