As inflation ravages people’s wallets and skyrocketing property taxes force Texans out of their homes, public servants in the Texas House gave initial approval to legislation that purports to provide $17 billion of property tax relief.
It could have been a lot more, though.
House Bill 2 and the related House Joint Resolution 1, both authored by State Rep. Morgan Meyer (R–Dallas), would reduce the maximum compressed rate for school district maintenance and operations taxes as well as change aspects of the appraisal cap, or the limit to how much local appraisal districts can increase a property’s taxable value every year.
Specifically, they allocate $11.7 billion of the $32.7 billion surplus for the 2022-23 budget to reduce the maximum compressed rate by about 15 cents per $100 of property value (from $0.8941 in 2022), while $5.3 billion is allocated to maintain property tax relief previously approved in 2019.
In addition, the proposal reduces the homestead appraisal cap from 10 percent to 5 percent and extends it to all property, both residential and commercial.
When Meyer introduced the bill, he boasted it “will result in the largest tax cut in Texas history,” echoing promises from Gov. Greg Abbott (R), Lt. Gov. Dan Patrick (R), and House Speaker Dade Phelan (R) to deliver record property tax relief. He claimed it would reduce school property taxes by 28 percent and increase the state’s obligation for funding public schools to more than 50 percent, adding that it “protects homeowners and businesses from the shock of rapidly rising property values.”
This claim was challenged when Tony Tinderholt (R–Arlington) attempted to amend the bill by increasing the compression from 15 cents to an amount equivalent to $20 billion in tax relief.
“Governor Greg Abbott has promised the largest property tax cut in Texas history. This amendment delivers on that promise,” he said. He noted the current record for the largest property tax cut is $14.2 billion during the 2008-09 biennium, which is about $20 billion in today’s dollars.
Tinderholt also pointed out how the proposal being debated includes $5.3 billion in previous tax relief, saying, “Only new compression should be considered when we boast to taxpayers about what we did with their money this session, especially when we over-collected nearly $33 billion from them.”
“If it was up to me,” he continued, “I’d use the entire $33 billion surplus and give it back to taxpayers—every single cent that we’ve over-collected.” Still, he acknowledged, “This allows us all to go home and look our voters in the eye and say, ‘We genuinely gave you what we promised—the largest tax cut in Texas history.’”
Tinderholt also referenced a remark Lt. Gov. Patrick made earlier in day: “We’re not doing appraisal caps. Period. End of story.”
“If you don’t know, [the] lieutenant governor across the way just said he would kill this bill. Let’s make this so darn good that he can’t kill it,” Tinderholt said.
Meyer opposed the amendment, saying, “We’re going to continue to have these conversations after we get this bill off the floor.”
The amendment failed by a vote of 118-20.
Martinez Fischer tried to incorporate a core component of the Senate’s property tax relief plan—increasing the homestead exemption from $40,000 to $70,000, or $100,000 for disabled individuals and those age 65 or older—while proposing an appraisal cap of 7.5 percent.
While he acknowledged that an appraisal cap would benefit owners of commercial property, he argued “there is more bang for a buck on a homestead exemption.”
“We don’t have to pick one or the other. We can do both,” he insisted, adding, “I think we may see something like this down the road.”
Martinez Fischer’s amendment failed by a vote of 77-65.
Turner suggested limiting the reduced appraisal cap to personal residences, arguing it could actually create a greater tax burden for residential homeowners, the reasoning being that taxing jurisdictions, being constrained by relatively stable property values, could just increase their property tax rates. Texans for Fiscal Responsibility and other taxpayer advocacy groups made the same argument during the bill’s committee hearing last month.
Turner’s amendment failed 89-56.
HB 2 and HJR 1 ultimately received initial approval from 140 public servants in the House.
Following a final vote tomorrow, the package of bills will head to the Senate, which passed its own property tax relief plan on March 22.