TFR Statement On SB3 – Property Tax Relief

May 19, 2023
TFR Staff
88th Legislative Session, Budget Surplus, Greg Abbott, Property Tax, State Budget

Taxpayers have a lot to be thankful for what seems to be a compromise between the House and Senate with the latest version of Senate Bill 3. As passed by the House, this bill includes $12 billion for a 15-cent compression of the school M&O portion of the property tax and increases the proposed Homestead Exemption to $100k. This bill also reforms property taxes by lowering the appraisal growth cap to 5% on increases for all real property. This was done in response to persistent calls from taxpayers across the state and organizations like Texans for Fiscal Responsibility holding the Legislature’s feet to the fire.

Unfortunately, despite the proclamation that it is now the “largest property tax cut in Texas history” by both the bill’s sponsor and House Republican leadership, that can only be true if you do not consider inflation from the previous largest cut given in 2008. The inflation-adjusted number to truly claim the largest property tax cut in Texas history is $20.4 billion. It is important to acknowledge how critical it is to adjust for inflation since the legislature has passed dozens of other bills this session adjusting funding for state programs and even their own pensions for inflation. The value of the dollar in 2023 is not the same as it was in 2008.

For this reason, the Texas Senate still has an opportunity to make SB 3 truly, the largest in Texas history. The current fiscal note for SB 3 is at $16.3 billion which means we are approximately $4 billion away from qualifying as such. TFR has long advocated for compression as the best method of property tax relief because it is both equitable and permanent. We call on the Senate, as typically the more conservative chamber, to add 5 more cents in compression to take SB 3 across the finish line and to finish what the House improved upon. By changing SB 3 to have 20 cents in compression the fiscal note should be over $20.5 billion in new relief, truly giving Texas the largest property tax cut in Texas history as promised by Texas Governor Greg Abbott.

We hope the Texas Senate takes advantage of the $33 billion surplus we have and return it to Texas taxpayers by adding additional compression to this bill.