All Hat, No Cattle: Legislators Fail on Promised Property Tax Cuts

AUSTIN – The Texas Legislature failed to reach an agreement on cutting property taxes Monday when last minute negotiations between the Governor, the Senate and the House broke down leaving Texas property owners without relief that was promised for months.  

Earlier during the regular session, the most popular component among senators for property tax relief was Senate Bill 3, a proposal to raise the state’s homestead exemption for school districts. That would raise the amount of a home’s value that can’t be taxed from $40,000 to $70,000, with an additional $20,000 bump for seniors. The proposal would save a homeowner who pays the state’s average school tax rate an additional $341 on their annual tax bill — and save seniors another $227 each year.

In exchange, the bill, which amends a 2019 landmark school finance law, would cut school property tax rates by 7 cents per $100 in property value. For the owner of a $300,000 home paying the state’s average school district tax rate, that would mean $210 shaved off their annual property tax bill.

House Speaker Dade Phelan and state Rep. Morgan Meyer's plan is radically different and passed the full House by a 139-5 vote in April.  The bill proposes pumping $12 billion into Texas school districts so that they, in turn, can lower their property taxes on home and business owners. For the owner of a $350,000 home, the package would result in more than $1,000 in savings over two years, according to Phelan’s office.

The idea is to tighten the state’s “appraisal cap” on how much a home’s taxable value can rise each year. The House proposal would lower the cap from 10% to 5% — and expand the benefit to owners of business properties like grocery stores, restaurants and apartment complexes.

Phelan and Meyer argue lowering the cap is meant to ease property owners’ concerns over eye-popping property appraisal increases in recent years — a symptom of rapid economic growth and the state’s red-hot pandemic-era housing market, which is cooling.

In the end, neither plan was approved leaving Texas property taxpayers facing huge jumps in appraisals and higher property tax bills.  

As we reported earlier, Gov. Greg Abbott Monday called the first special session immediately to tackle property tax relief and border security.  "We must cut property taxes." said Abbott.  "During the regular session, we added $17.6 billion to cut property taxes. However, the legislature could not agree on how to allocate funds to accomplish this goal. Texans want and need a path towards eliminating property taxes. The best way to do that is to direct property tax reduction dollars to cut school property tax rates.”