Texas lawmakers reach property tax cut deal. What it could mean for your tax bill

A deal has been reached for property tax cuts, Texas Lt. Gov. Dan Patrick and House Speaker Dade Phelan announced Monday.

The leaders and their chambers had been at odds for six months over the best way to deliver property tax relief, with a regular and special session ending with no deal.

That standoff appeared to come to an end with the announcement of an $18 billion compromise that includes an increased homestead exemption and money to fund schools so districts can lower the tax rates for home and business owners.

The deal includes:

• More than $12 billion to reduce school property tax rates by 10.7 cents for “all homeowners and business properties.”

• A $100,000 homestead exemption.

• A 20% cap on the appraisal increase of non-homestead residential and commercial properties valued at or below $5 million, according to the speaker’s office. The proposal would be part of a three-year pilot project.

• Savings on franchise tax for small businesses.

• New elected positions on local appraisal boards.

But there are still several steps before the tax cuts become law.

The three bills that make up the plan must pass out of the House and Senate and get voter approval on a November ballot. Only then would taxpayers see the potential savings on their bills.

How much could you save?

Including a tax rate cut already on the books, the deal would mean $1,311 in savings for the owner of a $350,000 home in the Fort Worth school district. But most homeowners won’t see that kind of relief on their tax bill because of skyrocketing appraisals.

“It has been a long road, but this is a great day for all property owners,” Patrick said in a statement. “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.”

Patrick has been insistent on increasing the homestead exemption for Texas homeowners. The House during the first special session passed a bill solely focused on cutting tax rates, as specified under Gov. Greg Abbott’s special session call. Phelan has also called for lowering the appraisal cap and extending it to all business types.

“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,” Phelan said in a statement.

What’s next and does Gov. Greg Abbott support the plan?

The tax relief bills being carried in the Senate by Sen. Paul Bettencourt, a Houston Republican, while Rep. Will Metcalf, a Conroe Republican, is carrying the constitutional amendment that will go to voters.

Lawmakers hope to vote on the bills later this week, according to news releases from Patrick and Phelan’s offices.

Abbott said he’d sign the proposed plan if it makes it to his desk.

“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,” Abbott said in a statement. “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.”

How would appraisal district boards change?

The plan includes changes to the structure of the board of directors for appraisal districts.

In counties with 75,000 people or more, such as Tarrant, there would still be five directors appointed by the taxing units in the district. But there would also be three new directors elected by voters. Terms would last four years instead of two.

Bettencourt said he hopes the state will see directors that listen more to Texas taxpayers.

Does the proposal include relief for renters?

Several House Democrats on Thursday proposed a plan directly aimed at helping renters by providing an up to 10% rebate on rent for those who’d had the same landlord for a year.

Those measures were not part of the compromise deal, but Bettencourt said he believes the tax cut deal will still help renters.

“This is such a massive change in taxation for all taxpayers that this is going to be reflected in market rents,” Bettencourt said, adding that the changes will help push rent prices down.

Rep. John Bryant, a Dallas Democrat who authored the bill containing the renter rebate proposal, pushed back on the idea that landlords would pass savings to tenants.

“There’s no chance that any landlord is going to reduce rent based upon tax relief they have received,” Bryant said.

Also absent from the proposal is a bonus of at least $2,000 for teachers that was included in a Senate tax cut bill passed earlier this session. Teacher pay could be addressed at a later special session

Bryant’s bill included an increase in the amount of money districts get per student to help increase teacher salaries. That measure also was not in the deal announced Monday. It also would have raised the homestead exemption up to between $100,000 and $200,000.

Bryant said there are plans to offer the proposals as amendments to the compromise legislation when it’s brought to the floor for debate.

“The Patrick, Phelan proposal just dumps public education, it dumps homeowners and it dumps rental households,” Bryant said.

This is a developing story. Check back for updates.