Lawmakers at the statehouse have reached a deal to lower property taxes that they believe will pass the Texas House and Senate. The deal could provide more than $3 billion in tax relief, with most of it benefiting homeowners.
Texas Gov. Greg Abbott has made lowering property taxes a priority. And as the session nears an end, this agreement could make that happen.
Megan Kimble, political economy reporter for the Hearst Texas Bureau, joined Texas Standard to discuss the details. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
So give us some details about the agreement between committee members in the House and Senate on Monday.
Megan Kimble: Right, the question is how to spend about $3 billion that have been set aside for new property tax relief this session.
And essentially what the deal amounts to is increasing the homestead exemption from where it is currently, which is $100,000. So that reduces the taxable value of someone’s primary residence. And they will increase it to $140,000 or $200,000 if you’re a senior or have a disability.
And that was a proposal first articulated by the Senate. So the Senate has been a fan of increasing the homestead exemption since the beginning of this session, and most of the money announced in this deal will go to increasing that homestead exemption.
Another provision that was articulated by the House is increasing an exemption on what’s called business personal property tax, which is essentially equipment that businesses own.
So think inventory, office equipment, restaurant equipment. Business owners have to pay tax on that equipment even after they buy it. What the House has articulated is reducing or increasing an exemption to $125,000 on business personal property tax.
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What was the sticking point between the House and Senate’s plan for providing property tax relief for Texans? This seems like a marked change from two years ago when the two chambers were really at odds. So what has changed?
Yeah, listeners might recall 2023 when this was the kind of drawn-out battle that defined that legislative session – how to deliver, at the time, $13 billion in property tax relief. And this session, lawmakers really behind the scenes came to an agreement on their own to essentially go for the Senate proposal to spend more money on the homestead exemption.
I don’t actually know how that agreement was reached. And, you know, they didn’t tell me kind of the parameters of that deal. It was very clearly coordinated.
You know, it was announced simultaneously in a House committee and a Senate committee. So it was clear leadership had worked behind the scenes to come to this deal.
Have any lawmakers openly criticized this compromise?
You know, I talked to people in the House… The House had originally articulated further tax compression, which is reducing the tax rate that all properties pay, and businesses really like that because it applies to commercial properties.
So that’s really what the House fought for last session in 2023. And that’s, again, what they articulated this session. And there’s no compression in this final deal. And I talked a few House lawmakers who said, “you know, that’s okay, we’re moving forward with this deal.”
So what happens next? The bill still has to pass the full House and Senate.
Correct. The full House and Senate still has to vote on this deal and then Gov. Abbott has to sign it.
Gov. Abbott has not weighed in on the deal. I think the assumption is that he’s been behind the scenes working on it with leadership. But indeed, it still has to pass the full both chambers.
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Well, what will you be watching as this final phase unfolds?
You know, are there any last minute fights? Are there any wrinkles that will come to the front?
I mean, for me, I think a story I have been following this whole session is the current budget for the upcoming biennium allocates $51 billion for new property tax relief and property tax relief that’s been passed in last session.
And an increasing number of lawmakers – Democrats and Republicans – have said, “hey, can we continue to afford this? Can the state continue to afford to set aside 22% of its overall spending buying down property taxes for Texans?” And I think that chorus is only gonna get louder.
Anything else you think is important to keep an eye on as we near the end of the session and property taxes look like a reality?
I think, you know, we’re in the final weeks of the session. It seems like this deal is pretty well hammered-out, so I would be surprised if something derails it, but I certainly will be watching to see if that happens.