Property tax relief bills set to go to governor
The estimated 250,000 Texans who buy new homes each year that qualify for homestead exemptions soon will become immediately eligible to receive the property tax breaks, instead of having to wait until January of the next year under a bill headed for Gov. Greg Abbott’s desk.
Senate Bill 8, which lawmakers expect to generate about $50 million in annual savings for new homeowners, passed the Texas House on Friday without any opposition, becoming the first measure to hit the governor’s desk since he called lawmakers back to Austin in July. It is set to take effect Jan. 1.
A second, more expansive tax proposal would extend the Legislature’s 2019 cuts on school property tax rates to elderly and disabled homeowners, providing a rare decrease in their annual bills. That measure, SB 12, is expected to reach the governor in the coming days. It would take effect in January 2023 if voters approve a constitutional amendment authorizing the tax cuts in next year’s May local elections.
Under the Texas Constitution, school property taxes for most property owners are frozen at the amount they paid upon turning 65, while homeowners with disabilities receive the same benefit when they buy a new property.
Though that provision leaves many elderly and disabled homeowners with lower tax bills than some of their neighbors, it also means lawmakers must approve a constitutional amendment to reduce their school property tax rates in line with the statewide cuts from 2019.
State Sen. Paul Bettencourt, a Houston Republican who co-authored the legislation, said it would apply to more than 1.8 million seniors and roughly 180,000 disabled homeowners, collectively saving those residents about $250 million.
The law would trigger a rare drop in the annual school property taxes paid by about 2 million homeowners, the largest item on most of their overall tax bills. In most cases, laws described by elected officials as “property tax relief ” merely slow the growth of future bills, with rate cuts that are unable to erase the effect of rising property values.
Under the new law, those over 65 and those with a disability whose taxable property values are locked in place by existing laws would pay a lower rate on their property values, leading to a decrease in their bill.
“I hope a unanimous vote from the Senate is a signal that this really is good bipartisan legislation,” Bettencourt said. “This isn’t just tax relief. This would be a tax cut, and over time it would continue for as long as (seniors and disabled Texans) own the home.”
The individual savings would vary depending on a resident’s home value and how much the local school district decreased its tax rate in response to the 2019 law. Bettencourt’s office estimated $250 million in annual savings for 2 million homeowners works out to about $125 per household.
Though the House approved the bills without resistance, state Rep. Donna Howard, D-Austin, criticized Republicans for not advancing similar legislation she filed during the regular session. After her proposal failed to receive a hearing in the House Ways and Means Committee, Howard said, she tacked it on to a separate education bill as an amendment before it was stripped by a conference committee controlled by Republicans.
“I appreciate the leadership in this building resurrecting a good idea and recognizing the mistake in not passing my legislation earlier,” Howard said. “But I also hope that political leaders and voters realize that there’s plenty of good things to pass that originate from the other side of the aisle.”
Bettencourt said lawmakers had far less money to work with during the spring session, before Texas Comptroller Glenn Hegar issued a revised revenue estimate that gave lawmakers roughly $7 billion more to spend over the summer. He said the new funding gives the state enough flexibility to reimburse school districts for revenue lost as the new laws are put into effect.
Bettencourt also criticized Howard for participating in House Democrats’ quorum break, which killed the GOP’s priority elections bill and all other legislation during the first special session — including the tax proposals. Had the constitutional amendment passed earlier, Bettencourt said, it could have gone on this year’s November ballot and taken effect a year earlier, in January 2022.
“Even though Rep. Howard attended the first hearing (on the bills), unfortunately she did not attend the rest of the session, along with the House Democrats,” Bettencourt said. “And so without a quorum, this bill could not advance.”