Property Taxes to be Slashed: Agreement Reached in Texas Legislature
After months of negotiations, Republican lawmakers in Texas reached a consensus on Monday on methods to lower property taxes for Texans. The $18 billion agreement between the Texas House and Senate is designed to bring tax relief to the state’s 5.7 million homeowners, implement a temporary limit on appraisal increases for certain non-homesteaded properties, and decrease franchise taxes for small enterprises. In addition to these measures, a large sum of money is set to be directed toward school districts to facilitate tax reductions across the board.
This significant agreement, which incorporates over $5 billion allocated for property tax relief in 2019, is expected to navigate the legislative process and become law later in the week. However, it’s important to note that the proposed funding does not include any additional support for public education, according to legislation put forward by state budget leaders on Monday.
Before becoming law, the proposal must first gain approval from both legislative chambers and then proceed to the desk of Governor Greg Abbott, who has expressed eagerness to sign the bill. Subsequently, the plan requires the endorsement of the electorate in a constitutional election scheduled for November. If voters pass the measure, the tax reductions will take effect from the 2023 tax year.
Abbott commended the breakthrough agreement in a statement issued on Monday, noting that he had pledged during his campaign to return a significant portion of the state’s record budget surplus to property taxpayers. He hailed the House and Senate deal as a step towards the fulfillment of that promise and signaled his anticipation to ratify the largest property tax cut in Texas history.
Lt. Gov. Dan Patrick also spoke positively about the outcome of the negotiations, highlighting the collaborative efforts of Texas House Speaker Dade Phelan and members of both chambers over the past week. Patrick asserted that despite the lengthy negotiation process, the agreement reached would greatly benefit homeowners and businesses.
Under the proposed law, approximately $12.6 billion will be used to decrease the school property tax rate by 10.7 cents per $100 valuation for homeowners and business properties. This legislation also includes a significant increase in the state’s homestead exemption from $40,000 to $100,000, costing an estimated $5.3 billion. Additional relief will be provided to senior citizens and property owners with disabilities, averaging an extra $170 per year.
State Sen. Paul Bettencourt, the author of the Senate bill, stated that the tax cuts would save the average homeowner about 41.5% on property taxes each year, translating to an average annual savings of roughly $1,300.
Additionally, the legislation includes a program labeled as a “circuit breaker” – a three-year cap of 20% on appraisal increases for commercial and non-homesteaded properties valued at $5 million or less. This cap can be adjusted for inflation annually by the comptroller. However, unlike similar programs in other parts of the country, this proposal does not adjust property taxes based on income or the ability to pay, nor does it specifically target lower-income taxpayers.