Battle lines on property tax relief set

House and Senate leaders pitch competing measures with different routes to the goal

The elected leaders of the Texas House and Senate on Thursday slammed each other’s competing proposals for reining in property taxes, establishing an early rift between the two chambers over how to deliver the relief and who should receive it.

Armed with a historic budget surplus, lawmakers offered their first concrete plans this week to make good on the massive tax cuts promised by state leaders for months.

The House proposal would cut in half the existing 10 percent cap on year-to-year appraisal increases and extend the new 5 percent ceiling to all types of property, including businesses. It would also require local school districts to trim their property tax rates, collectively generating what House Speaker Dade Phelan said would be “the largest property tax cut in Texas history.”

The plan diverges significantly from Senate legislation filed Wednesday that would increase the state’s homestead exemption from $40,000 to $70,000, allowing homeowners to shave that amount off the taxable value of their primary residence for school property taxes.

Phelan, R-beaumont, framed the House’s approach as a “new way” of delivering property tax relief, “the likes of which we haven’t done in many, many decades.”

“The way I see it is, we can talk about homestead exemptions all day long, and that is great,” Phelan said in an address to the Texas Public Policy Foundation, a conservative think tank. “But what does that do for the small business?”

Lt. Gov. Dan Patrick, the Republican who presides over the Senate, responded to the House plan in an afternoon speech to the foundation, warning that lower appraisal caps would “undermine” recent reforms by the Legislature that ensure Texans’ property tax bills grow at slower rates than the actual appraised value of their homes.

“I think the intentions of the House are good, but that would be a disaster and undo everything we’ve done that has brought this property tax relief,”

Patrick said, arguing that lowering the annual caps would bring only temporary relief.

Under the House proposal, Phelan said, the owner of a $350,000 home would save $460 on their school property tax bill next year and $590 in 2025.

State Sen. Paul Bettencourt, the Houston Republican who authored the Senate property tax legislation, said his plan would provide $341 in annual school property tax savings for every homestead in the state, based on the average statewide school district tax rate.

The idea of lowering appraisal

caps has drawn opposition from groups like the Texas Taxpayers and Research Association, an Austinbased tax policy think tank, which argues the policy offers “a false promise of tax relief” by simply shifting the burden from one taxpayer to another.

That would remain the case even if lawmakers expanded the cap to cover all types of property, the group wrote in a report last month.

Phelan said he was “not in any way shutting the door on increasing the homestead exemption,” though he sees a number of pitfalls in the idea.

“Any tax savings, we’ll take it,” Phelan said. “But again, at a fixed value, with rising increases in appraisals, it’ll be stagnant. It’ll eventually go away. Some will never even see it. And again, it only applies to homesteads.”