Lt. Gov. Dan Patrick, Speaker Dade Phelan reach deal on 'biggest property tax cut in Texas history'
After weeks of back and forth, the Texas Senate and House may have finally come to a deal on the best way to lower property taxes in the state.
On Monday morning, Lieutenant Governor Dan Patrick and House Speaker Dade Phelan announced they reached a deal that they say will deliver "the biggest property tax cut in Texas history."
Both sides have been in a stalemate on property taxes, leading to multiple special sessions.
MORE: Texas Legislature News
The leaders, who were seen meeting last week, said the legislation would lead to an $18 billion cut in taxes if passed.
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," said Lt. Gov. Patrick in a statement.
According to a news release, the legislation will:
- Spend $12 billion on reducing the school property tax rate for all homeowners and business properties.
- Every homeowner who homesteads their home (approximately 5.7 million homeowners) will get a $100,000 homestead exemption.
- 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.
- Legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards.
"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," said Speaker Phelan in a statement.
Governor Abbott vowed to keep lawmakers at the Capitol until they agreed on a property tax relief bill to his liking.
Abbott gave his approval to the bill in a statement Monday morning.
"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," said Abbott. "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."
SMU economist Mike Davis has been watching the political debate over property tax relief play out in the state legislature.
"A fair amount of this tax cut is going to go not only to homeowners but also to businesses," he said. "I think the concern has been that not just that property taxes have gotten high. But for a lot of homeowners, they've gone up really rapidly and this creates all manner of heartache. If all of a sudden you've got a bill due at the end of the year that you really didn't think was going to be due. So hopefully these circuit breakers will cushion some of that blow."
Davis says he's concerned about long-term sustainability.
"The state's economy has been booming and property values have been going up. You know, nothing goes on forever. Hard times are going to hit Texas," he said.
The bill will be filed in the Texas Senate and House with the hope that it will be passed this week.