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Texas House OKs property tax relief bill. Its fate is grim in the Senate.

Three men wearing suits on the floor of the Texas House.
Sergio Martínez-Beltrán
House Speaker Dade Phelan, Rep. Morgan Meyer and Rep. Greg Bonnen speak to reporters after the Texas House voted on their property tax relief plan Thursday.

The Texas House of Representatives on Thursday passed legislation that would reduce the appraisal cap on all properties in a move aimed at lowering taxes for homeowners and businesses.

But Lt. Gov. Dan Patrick signaled the House’s version of the bill would likely make no traction in the state Senate.

House Bill 2 would cut in half the appraisal caps for homes and commercial properties — from 10% to 5%.

“HB 2 protects homeowners and businesses from the shock of rapidly rising property values by providing predictability while also making it easier to plan for future investment and economic growth,” Rep. Morgan Meyer, R-Dallas, said from the House floor Thursday.

Meyer added the state’s $33 billion surplus provides an opportunity to enact the “largest tax cut” in Texas history.

Under HB 2, the state would spend $12 billion to compress school property taxes, and replace them, over 2024 and 2025. That’s in addition to the $5 billion earmarked in the House budget that passed last week.

Meyer said lowering the appraisal cap on all real properties is the way to go.

“For the first time in history we are moving it from just a homestead over to all properties,” Meyer said. “So, you are going to have more Texans benefit from the cap.”

The bill preliminary passed the House 140-9 Thursday. It needs to clear one more procedural vote before it heads to the Senate.

Rep. Rafael Anchía, D-Dallas, said he supports the property tax reduction bill because of the impact it would have across the board.

“We’ve raised the homestead exemption at least three other times since I’ve been here and that provides tax relief for senior citizens,” Anchía said. “But this provides tax relief almost across the board not only for single-family homeowners but also commercial property owners so that we get additional investment here in the state of Texas.”

Anchía said he expects the bill to produce about $500 million for Dallas ISD over a two-year period.

Dead on arrival in Texas Senate

But Thursday’s vote sends a signal to the Texas Senate that the chamber is standing its ground on their version of property tax relief.

The Senate’s version is decidedly different.

Under that chamber’s $16.5 billion plan, the state’s homestead exemption would be increased from $40,000 to $70,000.

Currently, a homeowner with a primary residence valued at $100,000 currently has to pay taxes on only $60,000 — $100,000 minus $40,000. If the Senate plan were to pass, that homeowner would pay taxes on $30,000 — or, $100,000 minus $70,000.

Senior citizens would get an extra bump of $30,000, raising their homestead exemption to $100,000.

Patrick told reporters on Thursday the House bill would be dead on arrival in the Senate.

“Let me be very clear: you don’t negotiate on bad math,” Patrick said. “Just on math, their plan gives far less, their plan disrupts the market, their plan isn’t needed.”

Patrick noted the Senate passed the bill unanimously.

But after Thursday’s vote, House Speaker Dade Phelan said HB 20’s nearly unanimous passage also sends a message: “Our proposal is just as popular as the Senate’s proposal."

The speaker added that the House is willing to work with the Senate.

“What we need to do is what’s best for all Texans, and that is sit down and hammer out our compromise,” Phelan said.

Sergio Martínez-Beltrán is the former Texas Capitol reporter for The Texas Newsroom.
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