WEEK IN REVIEW
STATE LEADERS REITERATE COMMITMENT TO PROPERTY TAX RELIEF; SALES TAX SWAP
(AUSTIN) — Governor Greg Abbott announced that he is still united with leaders of the House and Senate to deliver meaningful property tax reform and relief before the end of the session. Joined by House Speaker Dennis Bonnen and Lt. Governor Dan Patrick at the Friday press conference, Abbott said he's confident the chambers will pass legislation meeting this goal that he will sign into law. Key measures that would accomplish this goal advanced in both houses this week, with Representatives approving the property tax growth reform bill, SB 2 on Tuesday, and the Senate Education Committee sending the school finance and property tax reduction measures to the full Senate in the form of HB 3 Wednesday. The measure is slated for debate in the Senate on Monday. The last component, a resolution to increase the state sales tax by one cent and dedicate the proceeds to paying for property tax reductions, will be taken up next week in the House, according to Speaker Bonnen. With all these pieces moving, Patrick said the Legislature is very close to delivering on its promise of meaningful tax relief. "I think we're at the five yard line, all we have to do is get the ball across the goal line," he said. If they can do that, Patrick said that property taxpayers will see thousands of dollars in property tax reductions over the next five years.
Abbott said that the plans moving through the process right now could reduce school maintenance and operations taxes, the largest single chunk of the average property tax bill in Texas, by fifteen to twenty percent. He said any reductions, however, have to come with limits on property tax growth, as increasing rates will wipe out any relief achieved this session. Those limits would come in the form of reduced rollback rates, which controls how much a taxing entity can raise rates before voters get to approve it, proposed at 3.5 percent for most non-school taxing entities and 2.5 percent for school property taxes. With those limits in place, and using some other revenue sources and fiscal strategies lawmakers are currently considering, Abbott says meaningful, ongoing property tax relief can be achieved. "If we are able to pass a sales tax increase that will be dedicated to driving down property taxes, if you add that to all these other strategies we are working on, we are going to be able to leave this capitol and inform our fellow Texans that their property tax bills next year are going to be less than they were this year," he said. "We will also be telling our fellow Texans that this property tax reduction is sustainable…This will lead to immediate and lasting property tax reduction."
The Senate plan would compress school M&O rates by fifteen cents over the next two years, and cover the lost revenue with the sales tax increase. Bonnen said that Texans are tired of half-measures that don't accomplish meaningful reductions in their tax bills. "Texans want to open up a property tax bill and see that it is lower, and they don't have to squint to notice," he said. "By swapping out a penny on sales tax to drive down property taxes, our property tax payers will not have to squint; they will see it with clarity." Dedicating the revenue from the tax increase to property tax relief requires a constitutional amendment, and passing a measure proposing a constitutional amendment requires two-thirds support in each chamber. Bonnen and Patrick said they think they can reach those thresholds. If it does go to the voters, Patrick predicted overwhelming support for the proposal.
Next week will be a critical one. House and Senate members will come together to work out the differences between the rollback rate reduction bill. The House will vote on the proposal to dedicate a one-cent sales tax increase to property tax relief. The Senate will take up their plan to reform public school education and cut school property taxes over the next two years. There's still much to be negotiated and agreed to before session ends on May 27th, and any delay endangers the chances for significant property tax and education finance reform. At Friday's press conference, however, state leadership expressed confidence that all of this can be achieved in time.
The Senate will reconvene Monday, May 6 at 10 a.m.