The Texas House and Senate have reached a compromise on a property tax reform measure. The two chambers announced the deal Monday morning, calling it "the biggest property tax cut in Texas history."
The Texas comptroller forecast the state would have a $32.7 billion budget surplus. Governor Greg Abbott has said he wanted half that amount returned to taxpayers in the form of property tax cuts.
But the House and Senate never reached a deal in the regular session of the legislature or the first special session.
"Unfortunately, we're in a situation where we have not come to an agreement on property taxes," Lieutenant Governor Dan Patrick said in Dallas last month. "This should be and will be, at some point, a great victory for all Texans."
The House and Senate released a statement Monday saying they had reached a compromise to provide $18 billion in tax cuts which would include:
1. Over $12 billion will be spent on reducing the school property tax rate for all homeowners and business properties.
2. Every homeowner who homesteads their home (approximately 5.7 million homeowners) will get a $100,000 homestead exemption.
3. Non-homesteaded properties, valued at $5 million and under, including residential and commercial properties, will receive a 20% circuit breaker on appraised values as a 3-year pilot project.
4. Legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards.
"It has been a long road, but this is a great day for all property owners," Patrick wrote in a statement Monday. "Speaker Phelan and I worked diligently together over the last week on the final bill. It made the difference. It may have taken overtime, but the process has produced a great bill for homeowners and businesses."
"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 wrote.
Governor Greg Abbott had listed property tax reform and border security as priorities for special sessions that started after Memorial Day.
"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. I look forward to this legislation reaching my desk, so I can sign into law the largest property tax cut in Texas history," Abbott wrote after the announcement Monday.
The Texas Association of Business celebrated the deal Monday.
"TAB applauds Governor Greg Abbott for declaring property tax relief a priority for 2023. Policies matter, and when the Best State for Business passes an $18 billion property tax cut, it will accelerate Texas’ GDP and population growth,” TAB CEO Glenn Hamer wrote.
The proposal will include the property tax relief plan and franchise tax bill that will both originate in the Senate. A constitutional amendment is needed to enact the measures, and that will be introduced as a House Joint Resolution.
The proposals must pass both chambers; Patrick and Phelan say they look forward to the bills' passage "in the coming days."
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