It appears Texas lawmakers have struck a deal on property tax relief—though critics say it doesn’t go far enough to return the state’s surplus to taxpayers.
During a meeting of the House Ways and Means Committee, Chairman Morgan Meyer (R–Dallas) announced that a compromise had been reached between the House and Senate, ending weeks of negotiations over competing tax cut proposals.
“We have reached an agreement with the Senate as it relates to tax relief,” Meyer told committee members. “I just wanted to thank the lieutenant governor, Chairman Bettencourt, the speaker, obviously the governor as well, for all of us working together to provide meaningful property tax relief. I’m glad we got this job done.”
State Sen. Paul Bettencourt (R–Houston) simultaneously announced the deal during a hearing of the Senate Committee on Local Government.
The House’s original proposal included $3 billion in required tax rate “compression” under existing law, an additional $3 billion in new compression, and $500 million to raise the exemption for business personal property. The Senate, meanwhile, focused on using its additional $3 billion toward boosting the homestead exemption for homeowners.
Property tax rate “compression” refers to the state using surplus funds to lower the school district tax rates that property owners pay, effectively reducing their overall tax burden.
The compromise includes the $3 billion in required compression, $3 billion for a homestead exemption increase, and approximately $250 million for business property tax relief—essentially splitting the difference.
This would result in a $125,000 business property tax exemption as well as a $140,000 homestead exemption for homeowners, up from the current $100,000.
Gov. Greg Abbott, in his State of the State address in February, initially called for $10 billion in property tax relief this session—making the current plan notably short of that benchmark.
Andrew McVeigh, president of Texans for Fiscal Responsibility, says the deal still misses the mark.
“Although any tax relief for property owners is certainly welcome, this doesn’t change the fact that the legislature is only proposing to provide about one-fourth of the $24 billion surplus back to taxpayers,” said McVeigh. “This surplus is over-collected taxpayer money, and comes on the heels of a $33 billion surplus from the previous session, which taxpayers received less than half of back in the form of property tax relief.”
“Fundamentally, this current legislature has been more focused on growing spending on new projects, not helping taxpayers get out from under the crushing weight of record-high taxation. Taxpayers deserve their money back, not bigger government.”
If passed, the homestead exemption increase will require voter approval in a constitutional amendment election in November.
A separate proposal to raise the homestead exemption for seniors was also heard briefly in the House Ways and Means Committee. If passed in conjunction with the rest of the property tax legislation, it would raise the exemption to $200,00 for those 65 or older or disabled.
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