by Julie Anderson
During a recent Permian Basin Petroleum Association (PBPA) luncheon, Association President Ben Shepperd referenced a reality that initially defined the 88th Texas Legislature: extra money on hand.
“We started out with about a $33 billion surplus in the treasury,” Shepperd observed. “Roughly two-thirds of that was due to, plain and simple, oil and gas production in Texas.”
From the get-go, the Texas leadership resolved to use approximately $17 million of that surplus for property tax relief, including some $12 million in new property tax cuts. The inability to compromise on how to provide this relief has now taken the spotlight.
“I am bringing the Texas Legislature back for Special Session #2 to provide lasting property tax cuts for Texans,” Gov. Greg Abbott announced on June 27. “During the five-month regular session, the Texas House and Texas Senate both agreed on cutting school district property tax rates, while the House wanted to add appraisal caps, and the Senate advocated for increased homestead exemptions.
“The Special Session #1 agenda was limited to the only solution that both chambers agreed on—school property tax rate cuts. 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. Special sessions will continue to focus on only property tax cuts until property tax cut legislation reaches my desk.”
A special session may only be called by the governor, may only last 30 days, and per Article 3, Section 40 of the Texas Constitution, is limited to topics designated by the governor’s proclamation. The current agenda reads as follows:
- ELIMINATING A PROPERTY TAX IN TEXAS: Legislation to put Texas on a pathway to eliminate school district maintenance and operations property taxes.
- LASTING PROPERTY TAX RATE CUTS: 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.
The Texas House convened at 11:13 a.m. on June 28, reported Michael Lozano, director of PBPA Government Affairs. The House referred House Bill 1 and HJR 1 to the House Committee on Ways and Means and moved to stand at ease until Friday June 30, with the intention of returning fully at 2 p.m. on July 5.
The Senate convened at 11:14 a.m. on June 28, referred Senate Bill 1 and SJR 1 to Senate Finance, and then passed Senate Bill 1.
As far as property taxes are concerned, the Senate is still standing firm on its proposed $100,000 homestead exemption, and with the exception of a new teacher pay amendment, approved measures identical to those passed as a final offer to the House in the last week of the first special session.
In addition to the homestead exemption increase, the Senate’s property tax relief plan includes further tax compression and would exempt more small businesses from the state franchise tax. In all, the bill would spend $18 billion to lower taxes, according to a press release issued by the Senate on June 28.
An amendment added to the Senate property tax bill would use some of the money already set aside in the current budget for schools to give a temporary bonus to Texas educators. The supplemental pay rates would apply through the next two school years and would equal the amounts approved by the Senate during the regular session. Teachers in urban districts would see an additional $2,000 each year, and rural teachers would get a $6,000 supplemental payment. Next session, lawmakers would decide whether to make these increases permanent, according to the Senate press release, https://senate.texas.gov/, “Texas Senate News.”
Before recessing until June 30, Lt. Gov. Dan Patrick told Senate members that he has already reached out to House Speaker Dade Phelan and the House leadership about face-to-face negotiations. According to Patrick, the two chambers will open those discussions next week.
Still, Patrick called on the House to pass the Senate proposal, adding that the Senate will not pass a bill on just compression.
“We must have that homestead exemption,” Patrick emphasized.
As of press time, Speaker Phelan had not commented on the latest Senate proposal or the pending House proposal, which includes taking all $12.3 billion lawmakers set aside this year for new property tax cuts and sending it to school districts so they can lower their tax rates, referenced as tax rate compression in the governor’s special session call.