Earlier this year, Gov. Greg Abbott announced his push for the largest property tax cut in Texas history and just last week, the Texas Senate took a step in that direction by unanimously passing all three property tax relief proposals prioritized by the state's Lieutenant Governor.
However, given the pressure of inflation, Texas policy advocates, such as James Quintero of Texas Public Policy Foundation, say there is more that can be done to ease the heavy tax burden for Texans.
“Policymakers are making good progress toward delivering the biggest tax cut in Texas history," Quintero told the Austin Journal. "As things stand now, the House has a plan to reduce property taxes by $17.3 billion while the Senate’s relief measure would cut taxes by $16.5 billion. Even still, there’s more they can do given the state’s historic surplus and savings. Their target should be at least $20 billion so as to exceed the inflation-adjusted property tax reduction achieved in the 2008-09 biennium,
On March 22, the Texas Senate unanimously passed all three property tax relief proposals prioritized by Texas Lt. Gov. Dan Patrick. In all, the Senate body claims it approved $16.5 billion worth of tax cuts.
Previously, the largest property tax cut in Texas history was $14.2 billion in 2006, Quintero said. In order to make good on Abbott’s promise, the legislature should be looking at a property tax cut benchmark of about $20 billion when adjusted for inflation from 2009 dollars. Quintero admitted to the Austin Journal, “Lawmakers are on the right path. They just need to keep going.”
The property tax relief package contained three pieces of legislation, each with its own priority.
Republican State Sen. Paul Bettencourt of Houston authored Senate Bills 3 and 4. Senate Bill 3 seeks to increase the homestead exemption from $40,000 to $70,000 while also allowing seniors or disabled Texans to deduct an additional $30,000 (so up to $100,000). Senate Bill 4 uses an additional $5.4 billion to provide an additional 7 cents worth of rate compression (amounting to about 74 cents per $100 value by 2025). It also uses an additional $0.4 billion to reduce recapture. Senate Bill 5, authored by Republican State Sen. Tan Parker of Flower Mound, simultaneously works to exempt the first $25,000 of personal property claimed by a business from the property tax. It also provides a new franchise tax credit of up to 20% of the amount of property taxes paid on the inventory itself.
On behalf of TPPF, Quintero recently published a paper titled "Ten Ways to Protect Property Tax Relief in 2023." In it, he highlights the importance of Texas tax reform, as it's just as important as tax relief. He says policymakers need to prioritize both during this historic opportunity to provide a great measure of tax relief to struggling homeowners and businesses. In order to achieve true success in this session, it is crucial for the 88th Texas Legislature to advance tax reform in tandem with tax relief.
The next step is for the property tax relief package to head to the Texas House of Representatives, Jeremy Kitchen of Texans for Fiscal Responsibility points out. It is unclear, however, whether it will be considered, given that Texas House leadership has prioritized legislation that takes an alternative approach to property tax relief. It is expected that House Bill 2, which recently passed out of the House Ways and Means Committee with the support of 10 of the 11 committee members, will make its way for consideration by the overall House of Representatives in the coming weeks.