(The Center Square) – After seven months of stalemate over how to provide roughly $18 billion in property tax relief, leaders of the Texas legislature announced they reached an agreement.
Lt. Gov. Dan Patrick and Speaker Dade Phelan announced in a joint statement on Monday that they’d reached “a breakthrough deal on property tax legislation” and their now agreed upon plan will be “the biggest property tax cut in Texas history.”
They made the announcement after the Senate already passed a bill this second special legislative session in opposition to Gov. Greg Abbott’s call for the second special session. His plan, Abbott argues, will provide long-lasting property tax relief, with the goal of eliminating one of two property tax bills over time, the public-school maintenance and operation (M&O) tax.
Patrick has previously said he wouldn’t budge on his property tax relief plan that includes increasing the homestead exemption. Critics argue no matter how much a homestead exemption increases, it won’t provide lasting relief because it gets wiped out by rising appraisal rates and inflation. While the House already unanimously passed a property tax relief bill including a homestead exemption, another proposal Phelan wanted included capping appraisal values of all real estate, not just residential. Patrick previously suggested this would benefit Phelan’s multi-million dollar family business that owns significant real estate properties in Texas.
The agreed upon plan announced Monday would deliver roughly $18 billion in tax cuts, including directing over $12 billion to reduce, or compress, what homeowners and businesses pay towards the public school M&O property tax. This addresses Abbott’s call, which prioritized compression as the sole means to reduce property taxes.
However, it goes significantly beyond the governor’s call, setting the legislature against the governor’s plan, and the possibility of a potential veto.
In response to the announced compromise on Monday, Abbott said he would sign the legislation.
“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,” he said, referring to the state’s historic $33 trillion surplus. “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.”
It includes Patrick’s ultimatum of increasing the homestead exemption to $100,000 for roughly 5.7 million homeowners.
It also includes an appraisal cap for non-homestead properties that Phelan wanted. The plan proposes a 20% cap on appraised values for all residential and commercial properties valued at $5 million and under, as part of a 3-year pilot project.
The compromise also includes measures already passed by the Senate in several bills to reportedly provide millions of dollars in savings for franchise and small business owners. It also creates new elected positions for local appraisal boards.
Patrick said, “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.”
He also thanked all 31 senators “for working together and being patient through this process,” and especially Sen. Paul Bettencourt, a Republican who represents his former district in Houston, who’s led the charge on filing property tax reform bills.
Phelan said the agreement was “a significant victory for all Texans.”
“Reducing property taxes, providing relief to small business owners, and reforming our appraisal system will ensure economic growth and prosperity,” he said, also thanking members of the House, including Republican Reps. Morgan Meyer and Will Metcalf “who worked tirelessly behind the scenes to help us reach a consensus.”
He also said, “Negotiations with the Lieutenant Governor have been extremely productive, and by coming together and finding common ground, the House and Senate are one step closer to providing much-needed, much-deserved relief.”
The Senate is introducing two property relief tax bills today: the omnibus property tax relief bill and the franchise tax relief bill. The House is introducing a constitutional amendment, House Joint Resolution (HJR), including the property tax relief proposals, which would be put on the ballot this November for voters to support or reject.
Both the Senate and House, in bipartisan agreement, are expected to pass the bills later this week.
