OAN’s Brooke Mallory
6:45 PM – Monday, July 10, 2023
After weeks of debate, the Texas House and Senate have reached an agreement in principle on a $18 billion proposal that will “deliver the biggest property tax cut in Texas history.”
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Texas Lt. Gov. Dan Patrick and GOP House Speaker Dade Phelan’s offices issued a joint statement on Monday morning announcing legislation that not only lowers the school property tax rate and raises the homestead exemption but also provides relief for small businesses.
“The deal represents a significant win for providing relief to Texas property owners and reflects the commitment of Texas leaders to address the concerns of taxpayers and provide significant relief from the burden of escalating property taxes,” read a joint statement from the Texas House and Texas Senate.
Patrick and Phelan anticipate the measure’s introduction in the Senate on Monday and its passage later that week. It will then be sent to Republican Governor Greg Abbott’s desk, where it is likely to be signed.
“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. Today’s agreement between the House and the Senate is a step toward delivering on that promise,” Abbott said on Monday. “I look forward to this legislation reaching my desk so I can sign into law the largest property tax cut in Texas history.”
Following the conclusion of the regular session in May, Abbott called the state legislature into special session and gave them the task of providing tax relief to property owners. The session ended with neither the House nor the Senate agreeing on new legislation and with both parties embroiled in a public battle about how to proceed.
The House pushed for property tax relief by compressing the school tax rate and including relief for small business owners, but it did not include an increase to the homestead exemption, which the Senate rejected. The Senate stipulated that any law passed must increase the homestead exemption from $40,000 to $100,000.
The increased exemption may save homeowners hundreds of dollars per year on their property taxes, however, the amount varies due to different tax rates around the state.
With the House and Senate deadlocked, Abbott said he would keep calling special sessions until both Houses submitted legislation to his desk. As soon as the first special session concluded, the governor convened a second special session, which included two action items.
The governor wanted lawmakers to develop a route to eliminating school district M&O taxes, but not all property taxes, and to employ compression to lower the school district property tax rate.
According to the joint statement, Phelan and Patrick met with members of both chambers in Austin, Texas, last week and reached an agreement.
Over $12 billion will be invested to lower the school property tax rate for all households and commercial businesses. Additionally, every homeowner who homesteads, which is roughly 5.7 million people, will receive a $100,000 homestead exemption.
As part of a three-year trial experiment, non-homesteaded assets valued at $5 million or less, including residential and commercial properties, will get a 20% circuit breaker on assessed valuations.
The law would also provide small firms with franchise tax breaks and create new elected posts on local assessment boards.
“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.
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