The Texas House of Representatives and the Senate disagree on how to cut property taxes. Here’s what their proposals say.

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The Texas House of Representatives and Senate have finally unveiled their proposals to lower the tax burden of property owners on the table — and there’s a huge gulf between them when it comes to their high-value items.

Property tax fighters in the Senate want to increase the state’s property tax exemption in school districts, which will reduce the amount of home value that can be taxed. The Senators will further increase this benefit for the elderly.

Meanwhile, House leaders backed a proposal to tighten the cap on how much more school districts can tax property owners each year, an idea that has proved controversial even among staunch supporters of the property tax cut.

But there is some agreement between the two chambers. Leaders in both houses want the state to spend $5.3 billion to extend existing property cuts and allocate an additional amount to further reduce school property taxes.

Here’s what you need to know about each offer.

Senate wants to boost state’s home garden exemption

This week, Republicans in the Senate laid out a $16.5 billion package to expand tax credits for homeowners, as well as property tax credits and business loans.

One of Lt. Governor Dan Patrick’s priority proposals, which has received unanimous support from Republican and Democratic senators, is to increase the exemption of state home gardens from school property taxes — or the dollar amount of a home’s value that cannot be taxed to pay for local schools. – from 40,000 to 70,000 dollars. This offer will save a homeowner who pays the state average school tax an additional $341 in their annual tax bill.

Senate lawmakers also want to triple the seniors’ property tax exemption, which would increase the amount of that benefit from $10,000 to $30,000. The increase will save these homeowners another $227 a year. In general, senior homeowners will not be taxed on the first $100,000 of the value of their home if both tax exemptions prevail.

“These are significant and unprecedented numbers,” said State Senator Paul Bettencourt, a Republican from Houston and Patrick’s top Senate property tax aide.

Another bill would use $5.38 billion to reduce school property taxes by injecting more state dollars into schools, in addition to the $5.3 billion already earmarked for this purpose in the budget proposals of both houses, an advantage that would apply as to homeowners and businesses. The measure, along with a bill to vacate the homesteads, was approved by the Senate Finance Committee on Wednesday.

But critics point out that tenants would not benefit from either the estate’s exemption or wider tax cuts. About 14 cents of every dollar paid by a tenant goes towards property taxes, according to the National Apartment Association.

Proponents of the tax cut argue that property tax cuts for homeowner school districts will be passed on to tenants in the form of more lenient rent increases. But critics say there’s no guarantee that landlords in the still-hot Texas rental market will hand over their savings to tenants.

Another measure by state senator Tan Parker, a Flower Mound Republican, would cut the commercial property tax by about $1.5 billion.

Raising the home valuation limit

Texas House Speaker Dade Phelan’s major property tax proposal calls for a $17.3 billion cut and a stricter limit on how much more a home’s value can be taxed each year.

Phelan’s proposal, introduced by House Ways & Means chairman Morgan Meyer, a Dallas Republican, would seek a $12 billion school property tax cut on top of the $5.3 billion outlined in the House budget proposal. If it passes, the owner of a $350,000 home will see a total annual savings of nearly $1,300 over the next two years.

But a key part of Phelan’s proposal has met with opposition from tax cut advocates and groups representing businesses like those intended to benefit the bill.

In Texas, there is a “judgment cap” on how much the value of a homeowner’s primary residence, which can be taxed by school districts, can increase each year. The House proposal, supported by 57 other House members, including a handful of Democrats, would lower the cap from 10% to 5% for homeowners and expand benefits for owners of commercial real estate, such as restaurants and apartment complexes.

During a Ways & Means committee hearing on Monday, Meyer said the tightening of valuation caps “will protect homeowners and businesses from the shock of soaring property values ​​and also make it easier to plan for future investment and economic growth.”

But within a few weeks of Phelan bringing the idea to the attention, there was vociferous skepticism.

On the Senate side, Patrick and Bettencourt said the cap-assessment proposal would reverse the progress the Legislature has made in recent years toward slowing property tax increases — progress made by limiting how much cities, counties and school districts can increase. their income from property tax each. year. Some proponents of lowering property taxes warn that lowering the valuation cap would encourage local governments to raise their tax rates to make up for any loss of revenue due to the valuation cap.

“The only way to affect tax bills is to slow government growth,” Betancourt said.

Wealth tax experts also say that raising the cap would make the property tax system more unfair and eventually lead to stark inequalities. For example, a new homeowner will face a much higher tax bill than a neighbor who has owned their home for 20 years and benefits from decades of limited value. The same disparity arose in California after voters imposed caps on their home taxes in the late 1970s.

That’s a concern Glenn Hamer, head of the Texas Business Association, raised before a committee on ways and means this week, testifying that the restriction would “create an unequal distribution of taxes” between business owners and homeowners.

“The restrictions do not provide proportionate relief,” Dale Crimer, president of the business-backed Texas Association of Taxpayers and Researchers, told the Ways & Means committee. “In fact, they create significant disparities between taxpayers.”

So far, Meyer is sticking to this proposal.

“We are slowing growth,” Meyer said in response to Crymer. “Which is why, with all due respect, sir, I disagree with your analysis.

The decision to exempt the Senate from the homeland tax and the House of Representatives proposal to limit the assessed value will ultimately be decided by a vote if they approve both Houses.

Disclosure: The Texas Business Association and the Texas Taxpayers and Researchers Association provided financial support to The Texas Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial sponsors play no role in Tribune journalism. Find their complete list here.

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