05/01/19

Untangling the Property Tax Reform Debate

Texans were promised that this legislative session would be different. Unlike every legislative session in recent memory, when gridlock and acrimony were the order of the day, Austin politicians promised this time to work together and deliver for Texans. Every session in recent memory was dominated by the power battle between the conservative and liberal wings of the Republican party, represented by Lieutenant Governor Dan Patrick on the right and former Speaker of the House Joe Straus on the left.

This session, Texas lawmakers specifically promised to deliver two things: property tax and school finance reform. In fact, the 86th legislative session opened in January with a chummy press conference held by the “Big Three:”  Governor Greg Abbott, Lieutenant Governor Dan Patrick, and new Speaker of the House Dennis Bonnen — where they promised to work together, especially on those two issues. In fact, the implicit promise was to avoid the red meat social issues that had dominated headlines and divided Republicans in previous sessions — issues like the so-called “Bathroom Bill” and the ban on sanctuary cities. This time, they promised they would focus on, and most importantly deliver on, the less flashy but more far-reaching issues of property taxes and school finance.

Yesterday, lawmakers moved one step closer to delivering on those promises. Maybe.

Here’s what happened: A couple of weeks ago, the Senate passed their version of a property tax reform bill, Senate Bill 2 (SB2), which would lower the rate at which voters must approve a tax increase from 8 percent to 3.5 percent (and 2.5 percent for school districts). The House postponed deliberating on their version of the property tax reform bill, House Bill 2 (HB2), three times. Yesterday the House finally debated — and actually passed — an amended version of the Senate’s bill. But there are some Texas-sized convoluted caveats.

The most notable caveat is an amendment which ties the property tax reform bill to the school finance reform bill. In other words, SB2, which has now passed in the Senate and the House, will not take effect unless the Senate passes House Bill 3 (HB3), the school finance reform bill. From there it gets more complicated. State Senator Larry Taylor, Chairman of the Senate Education Committee, has made the Senate’s version of school finance reform contingent on a tax “swap” in the form of an increase in the state sales tax. And THAT has to be approved by two-thirds of both chambers and the voters in November!

Because the House and Senate leadership have inextricably linked property tax reform and school finance reform (and likely a sales tax increase), they will either sink or swim as a package.

The next step is that the House and Senate versions of SB2 will go to a conference committee to iron out their differences. Meanwhile, this morning the Senate moved their school finance reform measure out of committee. It will likely come before the full Senate for a vote this Friday.

There are 26 days left in this legislative session. Time will soon tell if lawmakers can get all the dominos to fall and actually deliver on their two top priorities.

Stay tuned as we introduce you to the key players (and the money behind them) in the battle to reform property taxes. Join us here to get the latest news delivered straight to your inbox.

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