They're back: Texas lawmakers try again for big property tax cut

Texas lawmakers, ordered back to work by Gov. Greg Abbott for a second special session, largely stuck with the same property tax cut proposals they passed during the prior session.

With the state projected to end its fiscal 2022-23 biennium on Aug. 31 with a record $32.7 billion budget surplus, Abbott and legislative leaders want to use a chunk of that money to fund a historic reduction in property taxes that would be put before voters in November in the form of a proposed constitutional amendment. But the House and Senate haven't agreed on a structure.

The Republican-controlled legislature on Tuesday ended the first special session, during which the House approved a bill focused on compressing school property tax rates to provide $17.6 billion of state-funded cuts to property owners, while the Senate passed legislation last week that would deliver $18 billion in cuts through rate compression and a higher homestead exemption.

Texas Lt. Governor's Office

On Wednesday, the House sent a repeat of its bill to committee, where it was promptly approved, while the Senate added $3.2 billion in supplemental payments to teachers over two years to its legislation, which passed the chamber in unanimous votes.

Lt. Gov. Dan Patrick, who heads the Senate, said his chamber was committed to giving property owners a $100,000 homestead exemption in addition to rate compression. 

"I think the bill you all have united today to pass with this (teacher supplemental pay) amendment is a bill that I would hope will be passed by the House as it is and sent right to the governor," he said.

Abbott, who wants to eventually end taxes school districts levy for maintenance and operations, warned Tuesday he will keep lawmakers in the state capitol.

"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," Abbott said in a statement. "Special sessions will continue to focus on only property tax cuts until property tax cut legislation reaches my desk."

Earlier this week, Patrick said eliminating school property taxes would require a dramatic increase in sales taxes, the largest revenue source for the Texas budget, and that the sales tax rate at its current level would not achieve lasting property tax relief. 

"As soon as sales tax flattens or declines in any year, property tax rates would skyrocket," he said in a statement. "The only tax cut that is lasting is a homestead exemption, which is locked into the Texas Constitution."

School maintenance and operations taxes total nearly $33 billion in 2023, according to state Legislative Budget Board data cited in a Senate press handout.