As the Texas Legislature enters its second special session of the year, the Senate unanimously passed a new tax relief plan, continuing the standoff between the two chambers.
Senate Bill 1, authored by Sen. Paul Bettencourt (R-Houston), seeks to increase the homestead exemption to $100,000 and doubles the franchise tax exemption, which means fewer small businesses will be required to pay the tax.
Additionally, the bill will allocate billions to reduce school property taxes in a process called compression. According to a release issued by Lt. Gov. Dan Patrick, the Senate’s plan would “provide a 43% decrease in homeowners school property taxes on average.”
“I have been fighting for property tax relief since before I held elected office,” Lt. Gov. Dan Patrick said in a statement provided to The Dallas Express. “I have been clear that I will not leave Austin without property tax relief targeted at homeowners through an increased homestead exemption to provide them as much relief as possible. Homeowners need property tax relief right now.”
“SB 1 delivers the largest property tax cut in Texas history by combining the power of the homestead exemption and compression for homeowners,” Patrick continued. “Additionally, SB 1 provides meaningful relief for businesses through compression and increasing the threshold before businesses are required to pay franchise taxes.”
The Senate also unanimously approved Senate Joint Resolution 1, which would let voters decide on a constitutional amendment to raise the homestead exemption and provide a pay bump for Texas public school teachers.
SJR 1 would grant a $2,000 bonus for teachers in a school district with more than 20,000 students and a $6,000 payment for educators in districts with less than 20,000. The difference would be to minimize the pay difference between urban and rural schools.
The lieutenant governor explained, “With under 45 days until the school year begins, the time is now for the Senate to provide Texas teachers with much-needed supplemental payments. The Senate added a provision to SJR 1 to make sure Texas teachers get the supplemental payments they need for the next two years.”
“The Texas Senate will continue to fight for homeowners, teachers, and businesses. We look forward to working with the House to pass property tax relief and supplemental payments for teachers in the coming weeks,” he concluded.
Gov. Greg Abbott called for a second special session to begin immediately after the first special ended, as reported by The Dallas Express. Abbott has openly sparred with the Senate, siding with the House’s tax relief plan that focuses primarily on the compression of the maintenance and operation (M&O) taxes that help fund public schools.
Abbott’s proclamation requested that the Legislature pass “Legislation to cut property-tax rates solely by reducing the school district maximum compressed tax rate in order to provide lasting property-tax relief for Texas taxpayers.”
Additionally, he instructed the House and Senate to advance “Legislation to put Texas on a pathway to eliminating school district maintenance and operations property taxes.”
“The Special Session #1 agenda was limited to the only solution that both chambers agreed on — school property tax rate cuts,” he explained. “After yet another month without the House and Senate sending a bill to my desk to cut property taxes, I am once again putting the agreed upon school district property tax rate cuts on the special session agenda.”
“Unless and until the House and Senate agree on a different proposal to provide property tax cuts, I will continue to call for lasting property tax cuts through rate reductions and working toward eliminating the school property tax in Texas,” he concluded. “Special sessions will continue to focus on only property tax cuts until property tax cut legislation reaches my desk.”
The House has not indicated that it would be open to changing its plan or adopting the approach favored by the Senate.
Speaker Dade Phelan (R-Beaumont) did stand up a new select committee during the last week of the first special session, as reported by The Dallas Express.
Announcing the move on Twitter, Phelan said, “The House is the only chamber to pass prop tax relief that is germane to @GovAbbott’s call & we have voted on the largest prop tax cut in state history 3 times now. As we wait for the Senate to follow the House’s lead, we are taking a proactive step to tackle what comes next.”
