- Governor Abbott has designated property tax relief as an emergency item
- HB 8 by State Representative Morgan Meyer provides tax relief in the form of a school tax rate reduction
- SB 4 and SJR 2 by State Senator Paul Bettencourt increase the homestead exemption by $40,000
State lawmakers are once again prioritizing the issue of property tax relief. However, leaders in the Texas House and Texas Senate are offering different approaches to the subject.
State Representative Morgan Meyer, Chairman of the House Ways and Means Committee, has authored House Bill 8, which provides $2.8 billion in property tax relief in the form of buying down school district property tax rates, known as “compression.”
In the Senate, State Senator Paul Bettencourt has authored Senate Bill 4 and Senate Joint Resolution 2, which would increase the homestead exemption by $40,000. This would raise the homestead exemption from $100,000 to $140,000 for most Texas homeowners, while the legislation would increase the $110,000 homestead exemption for seniors to $150,000.
In addition to these proposals, the initial draft budgets filed in the House and Senate each include $3 billion for property tax relief in the form of additional tax rate compression.
Governor Greg Abbott has designated property tax relief as an emergency item, calling on lawmakers to “use at least $10 billion of the state’s budget surplus for property tax relief” and “speed-up tax rate compression to lower school district M&O tax rates, providing relief for ALL property taxpayers.”
The Maintenance and Operations (“M&O”) tax rate is the portion of the property tax rate levied by a school district for the everyday expenses incurred by the district. The other portion of the school district tax rate, the Interest and Sinking (“I&S”) rate, pays for debt service on bonds issued by the district to finance capital expenditures.
Meyer stressed the need to provide tax relief to Texans.
“Over the past few years, I’ve spoken with thousands of voters who were crystal-clear in their concerns: property tax rates are exploding, and they need relief. Many of my House colleagues hear the same constant worries from their constituents. We must put money back in the hands of Texans. Governor Abbott has declared property tax relief as an emergency legislative item, and this bill package is a strong start towards providing the relief Texans deserve,” said Meyer in a statement upon filing House Bill 8.
Meyer is also the author of House Bill 9, which would increase the personal property tax exemption for businesses from $2,500 to $250,000.
James Quintero of the Texas Public Policy Foundation testified at committee hearings in the House in Support of House Bill 8 and the Senate in support of Senate Bill 4. He indicated that tax rate compression was his organization’s preferred method of achieving property tax relief during his testimony in support of House Bill 8 in front of the House Ways and Means Committee on Monday.
“Now, it’s no secret that compression is the foundation’s preferred method of returning surplus monies back to taxpayers, and there’s really three reasons for that stance. First, it drives policymaking toward an intentional goal, which is the incremental elimination of a particular strand of the property tax. Second, it provides immediate relief to property owners of all types and classifications. And third, it puts us on the pathway to eliminating Robin Hood,” said Quintero.
Jennifer Rabb, President of the Texas Taxpayers and Research Association, also provided testimony to the House Ways and Means Committee that tax rate compression was the “best method” to achieve property tax relief.
“We view compression as the best method from a tax policy perspective for delivering property tax relief because it applies proportionately across all taxpayers, all taxable value, and all taxable property that is on the tax roll,” testified Rabb.
In support of the Senate’s approach, Lt. Governor Dan Patrick has emphasized the benefits to homeowners by increasing the homestead exemption.
“I have been fighting to reduce property taxes long before I was elected to the Texas Senate. I have made increasing the Homestead Exemption my mission because it is the best way to deliver meaningful property tax reductions for homeowners,” said Patrick.
He added, “Four Hundred Ninety-Two school districts (49% of Texas school districts) have an average home value under $140,000, meaning school M&O property taxes will be eliminated for the average homeowner in those districts. Estimates show the average Texas homeowner will save $363.44 due to this increase. When combined with the school tax rate compression already included in the budget, the average Texas homeowner will save $496.57.”
