Instead of pursuing a plan to provide real property tax relief to Texans using surplus state funds, lawmakers in the Republican-run Texas House opted for a one-time tax rebate using federal COVID recovery money.
On Friday, state representatives passed a House “substitute” of Senate Bill 1, the Senate’s top-priority property tax relief measure by State Sen. Paul Bettencourt (R–Houston).
The version of SB 1 passed by the House would use $3 billion of American Rescue Plan Act funds to send one-time checks to Texas homeowners who receive a residence homestead exemption on their property tax bill. The money would be evenly divided among all eligible homeowners, not based on the amount of taxes paid.
Lawmakers estimate 5.7 million Texas homeowners would each receive about $525.
Bettencourt’s original bill, passed by the Senate more than three weeks ago, proposed using $2 to $4 billion in excess state revenue for one-time tax relief in the form of lowered school tax rates for all Texas property owners. The bill would have saved the average Texas homeowner about $200-$400 on next year’s tax bills and set the stage for future tax rate buy-downs.
Both versions of the bill also create a joint interim committee to study “potential solutions” to Texans’ property tax burdens.
One potential solution, which would provide permanent property tax relief, was left to die in the House Calendars Committee.
House Bill 90 by State Rep. Tom Oliverson (R–Cypress) would gradually replace local tax dollars with state dollars by applying 90 percent of each year’s state surpluses (if any) to buy down school districts’ maintenance and operations taxes.
HB 90 is part of the Texas Public Policy Foundation’s “Lower Taxes, Better Texas” plan to eliminate all property taxes by 2033.
HB 90 and SB 1 both received public hearings in the House Ways and Means Committee on September 30, but they remained stalled for over a week before a completely different SB 1 advanced to the House floor in the final days of the ongoing third special legislative session.
The bill now goes to conference, where members from both chambers will attempt to work out a compromise.
Lt. Gov. Dan Patrick and House Speaker Dade Phelan identified property tax relief as a priority in advance of the session, which began on September 20. Gov. Greg Abbott added the issue to his agenda on September 22.
But Republican leaders in the House are passing up an opportunity to provide real property tax relief.
House lawmakers also spent several hours on Friday allocating the bulk of the $16 billion in ARPA funds to healthcare, education, unemployment compensation, broadband infrastructure, and a host of other government agencies and programs.
