Property owners throughout Texas will see a reduction in their property taxes after an agreement was reached on the biggest property tax cut in the state’s history – if voters hit the polls in November.
Lt. Governor Dan Patrick and Speaker Dade Phelan (R-Houston) issued a joint statement on July 10 announcing the agreement, a historic $18 billion property tax cut. Patrick and Phelan met in Austin and, along with members of the House and Senate, worked day and night to reach a consensus on measures that include:
• More than $12 billion spent on reducing the school property tax rate for all homeowners and business properties.
• Every homeowner who homesteads their home (approximately 5.7 million homeowners) will get a $100,000 homestead exemption.
• Non-homesteaded properties, valued at $5 million and under, including residential and commercial properties, will receive a 20% “circuit breaker” on appraised values as a 3-year pilot project.
• Legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards, positions previously appointed by county officials locally.
“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. Both the omnibus property tax relief bill and the franchise tax relief bill will originate in the Texas Senate and the constitutional amendment will be introduced as a House Joint Resolution (HJR) to eventually go to voters for approval in November.
“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,” Gov. Greg Abbott said. “I look forward to this legislation reaching my desk, so I can sign into law the largest property tax cut in Texas history.”
Sen. Paul Bettencourt (R-Houston), the primary author of the bill, said that nonhomesteaded real property valued at $5 million and under will receive a 20% circuitbreaker on appraised value increases as a 3-year pilot project. Also addressed is County Appraisal Districts (CAD) governance. For the first-time ever, three county citizens will be elected countywide to each CAD board of directors in non-partisan positions. In addition, the CAD board of directors will now select Appraisal Review Board (ARB) members in each county with a population of 75,000 or more.
Bettencourt added that proposed legislation will also double the franchise tax exemption, resulting in an estimated 67,000 businesses no longer paying a franchise tax, as well as eliminate a “nuisance-tax” for 1.7 million taxpayers filing the no-taxdue forms for franchise taxes, saving businesses both time and money.
Angela Bellard, chief appraiser for the Jefferson Central Appraisal District, said she’s watching for “tweaks” on the bill that contains changes that impact all Texans.
“We’re trying to dig into it and figure it out,” Bellard said the day after receiving word of a legislative agreement. “The first thing is a compression rate that’s dealing with school districts. It’s the way they’re compressing the rate to save people 10% on the tax rate for school districts only, per $100 property valuation. What they are pushing for is a compressed tax rate and that will go into effect in 2023.”
Also going into effect is the increase in the homestead exemption from $40,000 to $100,000. “The local level can do something and then the state handles their part,” she added. “The state is looking at going up on the school district homestead to $100,000. Both will have to go out to the voters.”
Bellard said the state has the power for the approved amendment to go into effect immediately, if they so choose.
“We are going to certify numbers for the taxing jurisdictions and we’re going to certify two numbers to the school districts,” Bellard explained. There will be one number with the $100,000 homestead exemption and one without the $100,000 homestead exemption. “Tax bills go out in October and I’m sure the tax office is going to be prepared to do some kinds of statement that will go out. They are going to have to do two mail-outs or do one that states those numbers.”
Jefferson County Auditor Patrick Swain said the biggest highlight from the proposed legislation is increasing the homestead exemption for school district taxes from $40,000 to $100,000.
“The state is taking their surplus and using it to lower the homeowners’ taxes, especially with the $100,000 homestead exemption,” Swain remarked, also with a tentatively eye towards potential tweaks.
Chief Deputy Terry Wuenschel, of the Jefferson County Tax Assessor-Collector’s Office, noted her office will soon start working on the 2023 calculation for the taxing units to adopt tax rates – that may or may not be soon appearing in mailboxes throughout the region. According to Wuenschel, if the constitutional amendment goes before voters, her office would delay billing until after the election.
— Dannie Oliveaux