An agreement has been reached between the leaders of the Texas House and Senate on property tax relief, signaling a likely end to the standoff that has lasted since the Legislature convened at the beginning of the year.
While the legislation had yet to be filed when the agreement was announced, the broad terms of the deal appear to favor Lt. Gov. Patrick and the Senate’s proposal to increase the homestead exemption to $100,000 and use around $7 billion to additionally buy down—or “compress”—local school property taxes.
With previous property tax relief included, this would make the package around $18 billion.
Speaker Dade Phelan and the House had previously advocated for stronger appraisal caps, before pivoting toward a plan to use the entire budgeted amount for compression only.
Additionally, the compromise plan includes what they have called a “20% circuit breaker” appraisal cap on non-homesteaded properties under $5 million in value for a three year pilot program.
“Reducing property taxes, providing relief to small business owners, and reforming our appraisal system will ensure economic growth and prosperity, and this agreement is a significant victory for all Texans,” Phelan said following the deal’s announcement.
Patrick agreed, calling it a “great day for all property owners.”
“I started working to reduce property taxes at a Capitol hearing in 2003, 4 years before I was elected to the Texas Senate. It has been a long road, but this is a great day for all property owners. Speaker Phelan and I worked diligently together over the last week on the final bill. It made the difference. It may have taken overtime, but the process has produced a great bill for homeowners and businesses,” said Patrick. “I thank all 31 Senators for working together and being patient through this process. I especially thank Sen. Paul Bettencourt, who was with me on that first bus trip to Austin 20 years ago, for his tireless work on this issue.”
Gov. Greg Abbott, who had repeatedly supported using all the money for compression, said he would sign the legislation when it reaches it desk.
“I promised during my campaign that the state would return to property taxpayers at least half of the largest budget surplus we have ever had,” said Abbott. “Today’s agreement between the House and the Senate is a step toward delivering on that promise. I look forward to this legislation reaching my desk, so I can sign into law the largest property tax cut in Texas history.”
Some fiscal analysts, like Tim Hardin of Texans for Fiscal Responsibility, have challenged the notion that the property tax relief would indeed be the biggest in Texas history.
“Today, Texas taxpayers received crumbs from the table from our governor. We have been promised the largest property tax cut in history, a path to elimination, and half of the surplus used to buy down school property taxes. Today, it was made clear that none of those are happening,” said Hardin.
He also criticized the agreement for failing to address a plan to ultimately eliminate property taxes altogether.
“The Legislature decided to compromise on a plan that offered far less than what was proposed in the regular session, no path to elimination, and passed the failed homestead exemption increase that will once again be inflated away within years,” said Hardin.
“We must hold our elected officials accountable when they make promises and understand that as long as we are content with being last in priority, that is all we will ever get. TFR will continue to advocate for the restoration of private property rights and hold lawmakers and elected officials accountable for what they have promised,” he added.
Both the House and Senate are scheduled to return tomorrow afternoon.