Unlike the Texas Senate’s robust homestead exemption plan from 2015—which the Texas House watered down before passing—the upper chamber of the Texas Legislature is now proposing a failed approach that would not provide permanent tax relief.
Perhaps the most disappointing reform in recent years was a watered down “relief” measure that passed both legislative chambers in 2015. After it passed, conservatives who criticized the plan were validated. In fact, lawmakers from both chambers—including those in the Texas House who gutted it—lamented the reform did not provide lasting tax relief.
Why? Many Texans saw their home values increase, outpacing the small increase in the homestead exemption, resulting in these taxpayers paying higher school tax bills than before.
Two sessions ago, State Sen. Jane Nelson (R–Flower Mound) proposed a robust reform to the homestead exemption. The plan would have permanently changed the exemption from a flat-rate dollar amount to a percentage of the median home value—at 25 percent—also known as the “indexing” provision. Nelson explained the benefit of this provision at the time.
“Home values obviously have risen through the years but the homestead exemption has remained flat,” said Nelson said during a news conference in 2015.
The House gutted the improvement, and a flat-rate increase of $10,000, up to $25,000 in total, passed. If the indexing provision had been adopted, the exemption would have risen to $33,000 in 2016 and increased each year thereafter. Thanks to the Texas House under tight control of former House Speaker Joe Straus, the problem with the flat-rate exemption remains in 2019 and has robbed homeowners of tax savings every year since 2016.
Unfortunately, in 2019, the Senate under conservative firebrand Lt. Gov. Dan Patrick is proposing another flat-rate increase. State Sen. Paul Bettencourt’s (R-Houston) Senate Bill 5 would increase the homestead exemption from $25,000 to $35,000, but without indexing it to median home values.
That’s $13,750 less than the $48,750 exemption Texas homeowners would have if Patrick, Nelson, Bettencourt, and other lawmakers had passed what they proposed in 2015.
Under such a scenario it’s no wonder some taxpayers are belittling the reform. Bettencourt recently received a wave of criticism on social media after announcing SB 5.
“How long have you been trying to reduce our taxes? It seems like forever and nothing is done,” commented one taxpayer on Bettencourt’s Facebook post.
“The Republicans, including Bettencourt & Dan Patrick, have been saying they’re going to lower the cap on property taxes for years,” writes another taxpayer. She added, “By the way I’m a Republican, but they’re not much better than Democrats.”
Although an unfair attack, it speaks to the justifiable frustration felt by taxpayers. A quick glance at Bettencourt, Nelson, and Patrick’s voting records on the Fiscal Responsibility Index shows them to be substantially better than Democrats.
Republican lawmakers are naïve if they believe taxpayers will be satisfied with passing another weak proposal, especially when they’ve admitted a flat-rate exemption won’t provide permanent tax relief.
Republicans campaign as the pro-taxpayer party. But if their lawmakers fail to deliver lower tax bills by refusing to learn from past mistakes, can voters be blamed for lacking enthusiasm—or for voting differently—in 2020?
