At the conclusion of the 88th regular session of the Texas Legislature, missing from a list of other pro-business policy wins was a resolution on property tax relief. With a record budget surplus, state leaders all agreed that delivering meaningful relief to taxpayers was a top priority. However, agreeing on the delivery mechanism for that relief proved to be more complicated.
Where does the ongoing debate currently stand? What options are on the table for homeowners and businesses seeking tax relief? Here is a brief recap and summary of the current state of play.
Regular Session
At the beginning of the regular session earlier this year, legislators were informed by Comptroller Glenn Hegar that they were operating with a budget surplus of more than $30 billion. Committed to using roughly half of that surplus for property tax relief, the House and Senate came up with differing plans.
While both chambers agreed to use part of the surplus on tax rate “compression” – the state buying down local school district maintenance and operations taxes – the plans differed in substantial ways. The House focused on appraisal caps, seeking to provide homeowners and commercial property owners with certainty and relief from skyrocketing annual appraisals. The Senate focused on an increased homestead exemption for homeowners.
At the final hour before the end of the regular session, a compromise could not be reached. Governor Abbott immediately called a special session, tasking the Legislature with delivering on their promise of property tax relief.
First Special Session
Quickly after convening for a special session at the end of May, the House passed a property tax relief bill that was 100% tax rate compression. This plan was supported by Governor Abbott and would have lowered the tax burden for homeowners and commercial property owners. The House then adjourned for the remaining weeks of the 30-day session, indicating their work was done and they would not be open to compromising with the Senate.
The Senate did not agree with the House bill, and offered an alternate bill focused on property tax relief for homeowners while delivering tax relief to small businesses through franchise tax reform. However, the two chambers did not come to an agreement and a second special session was called on Tuesday, June 27 by Governor Abbott, again with a focus on property tax reform.
Second Special Session
Convening for another 30-day special session on June 27, it was the Senate that acted first this time around. The chamber passed a new property tax relief proposal, with the following tenets:
At the time of writing, it is unclear how acceptable the proposal will be to the Texas House and what kind of counterproposal the lower chamber might offer. Governor Abbott has signaled his willingness to sign onto a property tax relief agreement between the House and Senate.
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