After months of feuding on how to deliver a massive property tax cut, Texas legislative leaders announced Monday they reached an agreement on a bill that could be sent to Gov. Greg Abbott later this week.
With the state projected to end its fiscal 2022-23 biennium on Aug. 31 with a record $32.7 billion budget surplus, Abbott and lawmakers want to use a chunk of that money to fund a historic reduction in property taxes that would be put before voters in November in the form of a proposed constitutional amendment.
The agreed-upon $18 billion package would reduce school property taxes for homeowners and businesses by more than $12 billion through rate compression, while the homestead exemption would be raised to $100,000 from $40,000. Non-homestead properties valued at $5 million or less would get a 20% circuit breaker on appraised value under a three-year pilot program and small businesses would get some relief from franchise taxes.
“Reducing property taxes, providing relief to small business owners, and reforming our appraisal system will ensure economic growth and prosperity, and this agreement is a significant victory for all Texans,” Phelan said in a statement.
Patrick said while it took overtime sessions, “the process has produced a great bill for homeowners and businesses.”
Abbott said he looked forward to signing into law the state’s largest-ever property tax cut.
“I promised during my campaign that the state would return to property taxpayers at least half of the largest budget surplus we have ever had,” he said in a statement. “Today’s agreement between the House and the Senate is a step toward delivering on that promise.”
The Republican-controlled legislative chambers took different paths during the regular session, with the Senate favoring raising the homestead exemption for school district taxation and the House wanting to lower the cap on appraisal increases for all property.
After lawmakers ended the session on May 29 with no agreement, Abbott ordered them back to work in two successive special sessions. To put pressure on legislators, the governor vetoed dozens of bills, saying they can be reconsidered after property tax relief or school voucher bills reach his desk.
His goal is to eventually eliminate school maintenance and operating taxes, which total nearly $33 billion this year. School property taxes pledged for debt service on bonds would remain in place.