The Texas Tribune by Karen Brooks Harper and Joshua Fechter July 10, 2023
The deal would channel $12 billion to reduce the school property tax rate for homeowners and business properties, increase the homestead exemption, and create a pilot program to reduce taxes on certain residential and commercial properties. The legislation is expected to pass later this week.After a monthslong standoff among Texas’ top Republicans, state GOP lawmakers finally struck a deal Monday on how to cut Texans’ property taxes.
The $18 billion compromise between the Texas House and Senate — which includes more than $5 billion approved for property tax relief in 2019 — would lower taxes for the state’s 5.7 million homeowners and add a temporary cap on appraisal increases for some non-homesteaded properties.
It would also cut franchise taxes for small businesses and send billions of dollars to school districts so they can cut their taxes across the board. However, none of that money will go toward additional public education funding, according to legislation filed by state budget leaders on Monday.
The proposal must clear both chambers before it heads to Gov. Greg Abbott’s desk. Abbott said he looks forward to approving it. Then voters must pass the plan in a constitutional election in November. If voters approve the deal, the cuts would start with the 2023 tax year.
“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,” Abbott said in a statement after Monday’s announcement. “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.”
Lt. Gov. Dan Patrick said the last week of negotiations among himself, Texas House Speaker Dade Phelan and members of both chambers “made the difference.”
“It has been a long road, but this is a great day for all property owners,” Patrick said. “It may have taken overtime, but the process has produced a great bill for homeowners and businesses.”
The legislation, expected to be passed this week, allocates about $12.6 billion to reduce the school property tax rate by 10.7 cents per $100 valuation for homeowners and business properties. It also includes an increase to the state’s homestead exemption from $40,000 to $100,000 at an estimated cost of $5.3 billion, and some extra relief for seniors and property owners with disabilities, averaging an extra $170 per year.
The Senate bill’s author, state Sen. Paul Bettencourt, R-Houston, said the deal would save the average homeowner about 41.5% on property taxes each year, or an average of about $1,300 per year.
“Taxpayers WIN! All residential and commercial real property WIN! 5.72 million homesteaders WIN!” Bettencourt said in a written statement.
Another part of the plan, which in a way revives a contentious idea the House had previously proposed, would institute a three-year, 20% cap on appraisal increases for commercial and non-homesteaded properties valued at $5 million or below — a number that could be adjusted by the comptroller with inflation each year.
More:
https://www.texastribune.org/2023/07/10/texas-legislature-property-tax-cuts-deal/
