The Texas House Ways and Means Committee met Monday to consider a package of bills aimed at reducing Texans’ property tax burden, with an emphasis on lowering school district tax rates through compression rather than increasing the homestead exemption.
House Bill 8, authored by State Rep. Morgan Meyer (R-Dallas), proposes $2.8 billion in additional rate compression, reducing the maximum compressed tax rate by 3.31 cents per $100 valuation. Combined with the 6.8 cents of compression already included in the House budget, this brings the total new compression to 10.11 cents by the end of the biennium, using a portion of the state’s nearly $24 billion budget surplus.
“House Bill 8, along with our budget and HB 9, leverages our budget surplus and strong economic position to provide billions in permanent property tax relief to all Texans,” Meyer said during the hearing.
This approach follows Gov. Greg Abbott’s push for at least $10 billion in tax relief, which he declared an emergency item in his State of the State address last month. Both the House and Senate have allocated approximately $6 billion for property tax relief in their respective budget proposals.
The House’s plan differs from the Senate’s, which prioritizes raising the homestead exemption over additional compression. The Senate proposal, passed last month, would increase the homestead exemption from $100,000 to $140,000 ($150,000 for seniors and disabled Texans), while still including $3 billion in tax rate compression.
At Monday’s hearing, those who testified overwhelmingly supported compression over an increased homestead exemption, arguing it provides the most effective and broad-based relief for property owners.
Andrew McVeigh, president of Texans for Fiscal Responsibility, argued that homestead exemptions only benefit some homeowners, whereas tax rate compression benefits all property owners, including renters and businesses.
“Texans have been promised relief in the past, yet despite recent efforts by the legislature, property tax bills continue to rise,” McVeigh said. “Compression provides relief across the board, while exemptions do not.”
While lawmakers in both chambers are pushing for tax relief, fiscal conservatives warned that local governments are undermining these efforts by increasing spending and tax levies.
Bill Peacock, also testifying for Texans for Fiscal Responsibility, pointed to data showing that despite the $12.7 billion in tax relief passed last session, property taxes still increased statewide by $650 million. He and McVeigh argued that without stricter local spending caps, any tax relief passed by the legislature risks being eroded.
“The problem is that local governments keep blowing past the limits the legislature has put in place,” Peacock said. “Cities and counties are supposed to be capped at 3.5 percent revenue growth, but they’ve been increasing at rates of 9-10 percent.”
Some committee members signaled openness to addressing these concerns, with Meyer noting that additional proposals targeting local government tax hikes could be introduced later this session.
In addition to tax rate compression, the committee also discussed House Bill 9, which would dramatically increase the business personal property tax exemption from $2,500 to $250,000.
Meyer argued that this 10,000 percent increase would provide significant relief to small businesses while also eliminating burdensome administrative paperwork for those with inventories or equipment valued below the new exemption threshold.
“This would be the second-largest exemption of its kind in the country and would provide substantial savings to businesses across the state,” Meyer said.
However, unlike tax rate compression, HB 9 requires voter approval via a constitutional amendment, meaning Texans will have to weigh in on the measure in the November election should it pass both chambers.
All three bills were left pending in committee. The House and Senate will need to reconcile their differing approaches in order to pass a final property tax relief package before the end of the session.
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