The Senate is sweetening its property tax relief proposal, though it remains to be seen whether new changes will be enough to bring the House back to the table.
In calling the current special session, Gov. Greg Abbott has embraced a plan to use the money to help buy down—or “compress”—local school property taxes. The House passed a bill to do just that, providing just over $12 billion in property tax compression, then adjourned “Sine Die” that day, meaning they would not return for the remainder of the special session.
The Senate, meanwhile, passed their own version that divided up the same $12 billion with a smaller amount of compression but with an increase to the homestead exemption from $40,000 to $100,000, a move Lt. Gov. Patrick says is meant to ensure that more of the relief goes to homeowners rather than businesses.
That stalemate has continued, as Patrick and the Senate have stood firm in their embrace of an increase to the homestead exemption.
With the current special session slated to end a week from today, the Senate passed a new version of their proposal meant to bring the House back to the bargaining table.
Filed Tuesday morning and unanimously passed by the Senate just two hours later, SJR 2 and SB 26 would provide a $100,000 homestead exemption, along with 10 cents in property tax compression. The new bill would also limit the annual growth of school district revenue from 2.5 percent to 1.75 percent.
In a move to appeal to business owners, the new Senate proposal also increases the exemption for the state’s business franchise tax from $1 million to $2.47 million, making an additional 67,000 businesses exempt from paying the onerous tax.
Surrounded by many of the senators in a press conference Tuesday afternoon, Patrick called the proposal “the largest property tax cut in the history of the world.”
While the plan allocates $18 billion to property tax relief, only $12.7 billion is new relief. Groups like Texans for Fiscal Responsibility have noted that, with inflation, the property tax cut must be at least $21 billion to truly be the biggest cut the state has faced.
Nevertheless, Patrick said the Senate would remain strong in its commitment to increasing the homestead exemption.
“Under our plan, about 71 percent would go to compression and the other 28 or 29 percent or so is focused on giving homeowners that extra bump,” said Patrick. “I can tell you, it takes 21 votes for … a constitutional amendment for all compression. These members are not going to give up the homestead exemption.”
State Sen. Paul Bettencourt (R–Houston), who authored the most recent proposals, said the legislation was the product of many discussions over time.
“When you have this level of agreement of your Senate colleagues, I think it speaks volumes as to what an $18 billion tax relief record plan could do,” said Bettencourt.
Indeed, the press conference saw bipartisan agreement among members. State Sen. John Whitmire (D–Houston) jokingly thanked the House for “bringing the Senate together.”
“I just want to emphasize, we’re not going to get it done until both houses are in Austin working,” said Whitmire. “And I would urge the governor to use the leverage of his office, not necessarily in the fashion that he’s done last weekend,” referring to a large swath of vetoes by Abbott in retribution for the stalled relief negotiations.
House Speaker Dade Phelan, meanwhile, announced a new select committee on sustainable property tax relief on Tuesday morning. Patrick responded to the move by saying the Senate had been studying the issue for over six months already.
The clock is ticking, however, on the Senate’s proposal. As it requires a constitutional amendment, it must be passed by August 8 in order to be put on the ballot in November.