Gov. Greg Abbott has made it clear he wants to sign into law the “largest property tax cut in Texas history,” but exactly how much that is remains an open question.
“We now have the largest budget surplus in the history of our state," the governor said at his Jan. 17 third inaugural address. "But make no mistake, that money does not belong to the government. It belongs to the taxpayers. We will use that budget surplus to provide the largest property tax cut in Texas history.”
According to analysts at the Texas Public Policy Foundation (TPPF), the current largest property tax cut in Texas history was $14.2 billion passed in 2006.
Adjusted for inflation, if Texans were to receive the same property tax cut today, they would need to realize property tax relief of more than $20 billion.
Abbott’s office did not respond to the Austin Journal when asked if the Legislature needed to pass a tax relief package exceeding $20 billion to achieve what the governor has called the “largest property tax cut in Texas history.”
“Policymakers are making good progress toward delivering the biggest tax cut in Texas history," the foundation's James 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 package would cut taxes by $16.5 billion. Even still, there’s more they can do considering the state has a record surplus and savings. In the end, both chambers should settle for nothing less than $20 billion."
On March 22, the Texas Senate announced it had approved $16.5 billion worth of tax cuts, unanimously passing all three property tax relief proposals prioritized by Texas Lt. Gov. Dan Patrick.
The three-part legislation includes Senate Bills 3, 4, and 5. 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 $40 million to reduce recapture. Senate Bill 5 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 claims Texas tax reform is just as important as tax relief, and policymakers need to prioritize both during this opportunity to provide a historic measure of tax relief to struggling homeowners and businesses. In order to achieve true success this session, it is crucial for the 88th Texas Legislature to advance tax reform in tandem with tax relief.