News88th TXLege

Property Tax Relief: Where Does It Stand?

June 15, 2023
Andrew McVeigh
88th Legislative Session, Budget Surplus, Dan Patrick, Greg Abbott, Property Tax

The first-called special session has officially crossed the two-week mark, and with that, not much has changed regarding actual progress to bring down the skyrocketing tax bills of Texans. Among the various bills, property tax relief plans, political rhetoric, posturing, press conferences, and tweets, many Texas taxpayers are left wondering where their much-needed property tax relief actually stands.

Where Did We Come From?

The 88th regular session began with more than $33 billion in projected state surplus (over-collected tax dollars), and hopes were high that the Legislature would use those tax dollars to not only move toward substantial property tax relief for Texans but also a path to the elimination of the tax altogether. Governor Abbott had enumerated property tax relief as an emergency item during his State of the State Address and in the lead-up to the legislative session even called for the elimination of the tax. Those hopes were slowly eroded away as both chambers’ priority tax relief proposals began to move through the process. SB 3 and SB 4, the Senate’s homestead exemption and school Maintenance and Operations (M&O) compression bills, respectively, died late-session alongside the House’s property tax relief plan in HB 2. And despite last-minute efforts to pass a compromise plan in SB 3, House and Senate conferees failed to reach an agreement on the best approach. 

Where Are We Now?

Fast forward to May 29th, Memorial Day. The 88th regular session adjourned sine die with zero new property tax relief. That same day, Governor Abbott immediately called the first special session,0-4 with one of the charges being the passage of new property tax relief “solely by reducing the school district maximum compressed tax rate in order to provide lasting property-tax relief for Texas taxpayers.”

The Texas House and Senate promptly passed their own versions of a property tax relief bill: HB 1 and SB 1, respectively. The only version, however, to fulfill the governor’s call that tax relief be provided “solely” through compression was the House plan. HB 1 provides school M&O property tax rate compression of $0.162, for a grand total of 12.36 billion dollars in statewide relief for the biennium. The Senate plan, on the other hand, provides M&O compression of $0.10 and a $100,000 homestead exemption for homeowners. Notably, both efforts provide for less proposed tax relief than what was offered in the regular legislative session.

After HB 1 was passed and sent to the Senate, the House adjourned sine die on May 30th, leaving the ball in the Senate’s court. Nonetheless, Despite HB 1 being the only plan that fulfills the specific legislative charge from the governor (and the plan that moves us closest to eventual property tax elimination), Lt. Governor Dan Patrick refused to budge, insisting on homestead exemptions, rather than more compression. This has left us with two weeks of deadlock, along with rhetoric and posturing from both sides: The speaker’s office claiming that the Senate’s bill was not “germane to Governor Abbott’s special session call,” while Patrick challenged Abbott to a “Lincoln-Douglass style debate” on the issue, insisting that the “all-compression plan and eventual property tax elimination plan that is supported by Texans for Fiscal Responsibility, Texas Public Policy Foundation, Huffines Liberty Foundation and the governor himself is a “fantasy.”

On Saturday, June 13th, the Texas Freedom Caucus announced, despite disagreement and opposition from several of their own caucus members, a proposed “new” plan for property tax relief, hoping to break the stalemate. The Freedom Caucus plan proposes $0.162 in M&O compression, and a $100,000 homestead exemption, totaling $16.6 billion in new property tax relief ($4.3 billion more than either current plan). The plan made waves in the House over the weekend, although it is not clear where the extra $4.3 billion in relief money would come from. 

Lt. Governor Patrick, sticking to his guns this week, stated that his “good faith with the speaker” is broken, insisting the House come back to the Capitol to work. Meanwhile, Governor Abbott seems to be caving to the pressure from the lieutenant governor. Dan Patrick took to Twitter on Monday, indicating that Abbott told Patrick that he would “sign a property tax relief bill both the House & Senate agree on,” stating in a press conference in Houston that “there’s no way in hell that Governor Abbott is going to veto a $100,000 homestead exemption increase.” Then on Wednesday, Patrick lambasted the governor’s veiled threat to veto certain Senate bills if the House Plan was not adopted by the Senate. 

Where Are We Going?

What the final version of a property tax relief bill will actually look like is anyone’s guess. Texans for Fiscal Responsibility has consistently championed reining in the state budget and excessive spending and sending all surplus tax dollars toward school M&O compression and eventual property tax elimination. Property tax compression is the only strategy that is efficient, inflation-proof, and can lead to the eventual elimination of property taxes for good. But what our legislators end up giving us in the form of new tax relief remains to be seen. 

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