(Central Square) – State Assembly Leaders vowed to address high property taxes in this legislative session, in line with Gov. Greg Abbott’s pledge to secure the largest property tax cut in state history.
Abbott said the state’s record $33.7 billion budget surplus and record $188.2 billion biennial estimated budget “does not belong to the government. It belongs to the taxpayers. We will use this budget surplus to secure the largest real estate tax cut in Texas history.”
Lieutenant Gov. Dan Patrick, who heads the state Senate, also addressed the issue of property taxes on Tuesday after putting the issue on a list of legislative priorities he previously proposed. This time, he provided a ballpark figure to raise the homestead tax exemption from $40,000 to $70,000. He also called for an increase in the personal property tax exemption for businesses from $2,500 to $100,000.
Business personal property tax exemption reduces the taxable value of business inventories and other tangible property. In 2021, State Senator Paul Bettencourt, R-Houston, filed SB 1449, which was passed by the legislature and the governor signed into law. He increased the exemption from $500 to $2,500 but did little to help businesses as costs and taxes rose disproportionately due to inflation.
Speaker of the House Dade Phelan said after being sworn in last week that one of his goals is to review the evaluation process. Previous attempts by the legislature to lower property taxes proved to be inconsequential as home prices soared due to appraisal prices, school property taxes, and other factors that pushed home values and taxes up at high interest rates.
Phelan said his voters’ biggest concern is “the economy, the inflation, the difficulty of making ends meet, the ever-increasing property taxes that make many feel – year after year – that they’re renting their property from the government.”
He said: “Like them, I believe that tax breaks should be a priority. But time and time again we have seen legislatures provide some form of property tax relief, but for it to be sustainable we have to do something about runaway valuations because taxpayers deserve better.”
Several deputies have already submitted invoices this would limit how much the assessed value of the ad valorem tax on homestead could be increased.
While these proposals may provide some relief, there will be no real relief unless the M&O school property tax is reformed and the legislature cuts spending, fiscal conservatives argue.
Several groups, including the Texas Public Policy Foundation, proposed eliminating property taxes over time by using excess government revenue to pay local school taxes.
Public school district taxes make up the largest portion of property tax bills. The new tax structure, if implemented, would focus on funding local governments primarily through sales tax revenue, as well as fully funding public education.
In 2021, Senator Paul Bettencourt and Rep. Tom Oliverson, D-Houston, filed bills to implement this approach, but the Republican-led House of Representatives, led by Phelan crushed It.
TPP also has urged legislators to cut spending and commit to a zero-growth budget.
“From the point of view of limited government, wrote, “the most ideal option would be to prevent new growth in the next government budget.” The spending cap “would demonstrate incredible fiscal discipline, control over the growth of the new government, and provide the maximum amount of resources for the purposes of tax credits.”
Fiscal conservatives also calling legislature to pass meaningful property tax reform, but note that it may be difficult to implement because Phelan appoints Democrats to chair committees that block conservative bills, and most Republicans in the House of Representatives have received F grades for fiscal responsibility.
According to the Texas Tax Foundation ranks sixth in property taxes paid as a percentage of the value of owner-occupied housing, based on FY 2018 data.
According to Tax-rates.org, Texas counties collect an average of 1.81% of a property’s estimated fair market value in property taxes per year. Texans pay the highest average property taxes in King County at $5,066, followed by $4,351 in Collin County, $4,260 in Fort Bend County, $3,972 in Travis County, and $3,817 in Williamson County.
According to the site, Texas property taxes make up 3.65% of a homeowner’s income. The median income for Texans is $62,353 per year. Texas ranks 12th out of the 50 states in property taxes as a percentage of median income, according to a website that reports property tax statistics based on taxes owed on millions of properties across Texas.