SENATE, HOUSE OPEN BUDGET NEGOTIATIONS

(AUSTIN) — Conferees from both chambers met publicly for the first time on Tuesday, promising an amicable process that will lead to a strong state budget. Five representatives, led by House Appropriations chair and Friendswood Representative Greg Bonnen, and five senators, led by Senate Finance Committee chair and Houston Senator Joan Huffman, will work to resolve the outstanding differences in their prospective budget proposals. By far the biggest issue is how to deliver $15 billion in property taxes out of the $32 billion surplus. The House plan would cap home value appraisal growth, limiting the annual increase for any home to five percent, down from the current cap of 10 percent. The Senate would do it by increasing the homestead exemption, allowing homeowners to deduct $70,000 of their property value prior to assessment, up from the current exemption of $40,000. Additionally, Texans over 65, who make up about 40 percent of homeowners in the state, could write off an additional $30,000 of value, for a total of $100,000. According to Houston Senator Paul Bettencourt, the architect behind the Senate property tax plan, this will save the average homeowner more than $600 a year and the average senior homeowner more than a thousand dollars annually.

As chairs of their respective appropriations committees, Senator Joan Huffman of Houston and Friendswood Representative Greg Bonnen will lead their chamber's negotiation efforts on the state budget.

Lt. Governor Dan Patrick has said that the appraisal caps are a non-starter in the Senate. "When I came in, we focused on appraisal caps," said Patrick at a March press conference touting the Senate's property tax proposal. "But as a senator I learned that appraisal caps didn't work, so we had to come up with a better plan." In 2019, the Legislature passed a law that limited local property tax revenue growth to 3.5 percent for cities and counties, and 2.5 percent for school districts. If local leaders want to collect more revenue than that, they have to go to the voters for approval. Otherwise, says Patrick, they must lower the tax rate. This has delinked, he said, the increasing home value from increasing tax bills. "We've taken appraisal caps off of the table," he said at that same press conference. "The more the appraisal value goes up - that's ok… As that goes up, governments cannot raise their budgets more than 3.5 percent, or 2.5 percent in schools. So they have to lower the tax rate. If you lower the appraisal cap, the tax rate will go up, and in a few years we will have destroyed everything we have done." Patrick said that the fact that homeowners didn't see higher property tax bills as property tax values skyrocketed around the state bears this out.

Patrick again criticized appraisal caps at an April press conference, after the House had approved lower caps as part of their budget proposal. He said while the Senate plan could save Texas seniors thousands, the House plan doesn't do much for seniors. "Seniors' appraisals are already capped," said Patrick, referencing a state law that limits property tax bills for homeowners over 65. "So they get zero from the appraisal reduction. In the Senate, they get a thousand dollars [per year] just on the homestead exemption, for the rest of their lives." Again referencing the disconnection of appraisal values and tax bills created in 2019, Patrick said the House is operating on a faulty premise. "It's just the math, and the math doesn't work on appraisal caps," he said. "We will not pass those."

Both chambers gave strong support to their respective proposals, unanimously in the Senate and 136-10 in the House, so budget conferees will have the full backing of their chambers as they push towards a compromise. Time left in the session grows short and with a Memorial Day deadline looming, members must find a path that passes muster with both House and Senate leadership. If they don't, lawmakers could find themselves spending the summer in Austin continuing to debate the best way to deliver the largest property tax cut in state history.

The Senate will reconvene Wednesday, April 26, at 11 a.m.

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