News88th TXLege

Texas House Improves Senate’s Property Tax Relief Proposal

May 18, 2023
Jeramy Kitchen
88th Legislative Session, Budget Surplus, Greg Abbott, Property Tax

On Thursday, the Texas House of Representatives considered Senate Bill 3, or one of the prioritized pieces of legislation included in Texas Lt. Gov. Dan Patrick’s property tax relief package.

It passed its initial consideration by a vote of 140 in support and five in opposition. It will be considered one final time Friday; if it passes, it will be sent back to the Texas Senate.

SB 3 passed the Texas Senate on March 22. It was referred to the Texas House Ways and Means Committee on April 10 but was not considered in a public hearing until May 12, over a month later. Its sudden movement is likely the result of ongoing private negotiations between both Senate- and House-elected leadership as the 88th Legislative Session approaches its imminent conclusion. Notably, its consideration also takes place in the wake of public spats between Patrick and Texas House Speaker Dade Phelan over a lack of movement on their own legislative priorities in each legislative chamber.

So, What Is Included?

SB 3 is now best described as a fusion of property tax relief approaches prioritized by both legislative chambers. The new version of SB 3 also increased the homestead exemption threshold to $100,000 for all property owners; when it passed the Senate, it sat at $70,000 with the stipulation that elderly and disabled homestead property owners were the only ones to qualify for a $100,000 exemption.

The House’s version increased the threshold for elderly and disabled persons to $110,000. It also now includes the approach prioritized by Phelan, lowering appraisal caps from its current threshold of 10 percent as it applies to homestead property to 5 percent, ensuring it applies to all real property. Perhaps most importantly, however, it also increased the amount of school maintenance and operations (M&O) compression, an approach favored by Texans for Fiscal Responsibility (TFR) and several other fiscal watchdog groups.

Altogether, SB 3 is estimated to save an average homeowner of a $350,000 home about $1,325 in 2024 and $1,518 in 2025, according to the sponsor, Republican State Rep. Morgan Meyer (Dallas).

‘The Biggest Property Tax Cut in Texas History’

Meyer and House leadership continue to perpetuate the narrative that the legislation in its updated form includes more than $21 billion in total property tax relief, qualifying as the largest tax cut in Texas history. This number is somewhat misleading, as it continues to include more than $5 billion of previous property tax relief efforts being used to maintain the previous compression of the school M&O portion of the tax.

In reality, SB 3 includes more than $16 billion in new property tax relief efforts, which admittedly is a dramatic increase from both what the Senate offered in the original version of SB 3 and what the House offered in its prioritized property tax relief approach in House Bill 2.

In the end, this amount certainly represents tangible property tax relief that surpasses previous efforts and all but assuredly will provide Texas taxpayers relief, working to make a dent in their ever-increasing property tax burdens.

So, why the effort to ensure it is the largest property tax cut in Texas history? Well, Texas Gov. Greg Abbott made such promises on several occasions leading up to the 88th Legislative Session.

As TFR has reported several times before, to truly be the “biggest property tax cut in Texas history,” the total amount of relief would need to amount to more than $20 billion after you adjust for inflation on the previous historic record of $14 billion+ in the late 2000s.

Not a Path to Elimination

Though the House’s version of SB 3 does, in fact, provide additional tax relief compared to the version of the legislation that passed the Senate, it does not include a path to the elimination of the property tax altogether.

Sadly, all of the legislation seeking to do just that was never considered in committees before a deadline ended their legislative prospects, ultimately meaning that Texas taxpayers will continue to pay perpetual rent to the government.

Though SB 3 will provide tangible tax relief, it appears as if the Texas Legislature will end the legislative session without having truly provided the biggest property tax cut in Texas history, as promised by Abbott. Neither will lawmakers have returned the entirety of the nearly $33 billion budget surplus (over-collected taxpayer money) to Texas taxpayers, failing to fully taking advantage of the historic opportunity to provide a path to the elimination of the immoral property tax.

What Is Next?

The legislation will be considered one final time on Friday in the House. If passed, it will then be sent back to the Texas Senate for them to decide whether to concur with House amendments or appoint a Conference Committee to reconcile the differences between the versions.

A series of upcoming deadlines add urgency to the legislation’s consideration.

Concerned taxpayers may contact their lawmakers here.

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