Third Special Session of Texas Legislature may disappoint with no property tax reform on agenda, despite Bettencourt’s filing of Senate Bill 1 to provide minimal relief

Third Special Session of Texas Legislature may disappoint with no property tax reform on agenda, despite Bettencourt’s filing of Senate Bill 1 to provide minimal relief

The Golden Hammer Staff Reports

Austin, September 21 – Texans may find the third Special Session of the 87th Legislature disappointing with expectations of real property tax reform. In fact, Texas Governor Greg Abbott has failed to include property tax reform in his Proclamation for the Special Session, although it’s possible the Governor may still add that item to the agenda.

At this point, there are only five items in the Special Session Proclamation:

  • Dog Tethering: “Legislation similar to Senate Bill 474 as passed by the 87th Legislature, Regular Session, but that addresses the concerns expressed in the governor’s veto statement.”
  • Federal COVID Relief Appropriations: “Legislation providing appropriations from the American Rescue Plan Act of 2021 (ARPA), Pub. L. No. 117-2.”
  • Protecting Girls Sports: “Legislation identical to Senate Bill 29 as passed by the Texas Senate in the 87th Legislature, Regular Session, disallowing a student from competing in University Interscholastic League athletic competitions designated for the sex opposite to the student’s sex at birth.”
  • Redistricting: “Legislation relating to the apportionment of the State of Texas into districts used to elect members of the Texas House of Representatives, the Texas Senate, the State Board of Education, and the United States House of Representatives.”
  • Vaccine Mandates: “Legislation regarding whether any state or local governmental entities in Texas can mandate that an individual receive a COVID-19 vaccine and, if so, what exemptions should apply to such mandate.”

Property tax reform was on the agenda for the second Special Session from August 8 to September 8, 2021, but no passed because of the problems meeting quorum requirements in the Texas House of Representatives. Both Lieutenant Governor Dan Patrick and Speaker of the House Dade Phelan expressed support for the concept.

Patrick has vehemently claimed to support meaningful property tax reform in this third Special Session. Unfortunately, rather than supporting legislation to end Texas’ outdated property tax, the only proposal to come forward is a very expensive and temporary measure, so-called “compression.”

“Compression” would be a temporary buy-down using state or federal funds to lower school district property tax assessments, while still allowing the school districts to raise their spending feverishly as has occurred during the past two decades. The “compression” legislation in the pending Special Session is Senate Bill 1, which Houston Republican Senator Paul Bettencourt has authored and filed yesterday.

A hearing on Senate Bill 1 will receive a hearing in the Senate Finance Committee, even though property tax reform still is not a recognized subject of the Legislative Session.

The bill is identical to legislation which passed the Texas Senate on a 29 to 2 vote during the second Special Session.

Senate Bill 1 would provide additional school maintenance and operation (M&O) tax rate “compression” for the 2022-2023 school year of at least $2 billion. Each billion dollars of compression lowers school maintenance and operations tax rates by 3.3 pennies. All property owners in Texas would see a reduction of their Independent School District tax rate by at least 6.6 pennies, if the bill were to become law. The owner of a home with a taxable value of $300,000 would save $200 on their tax bill.

Senate Bill 1 directs the Comptroller of Public Accounts of the State of Texas to provide an updated revenue estimate by June 1, 2022. Based on that revised estimate, if there is a sufficient ending balance projected for Fiscal Year 2023 the amount of tax compression may increase. The difference between the revenue estimate provided to the Texas Legislature in August 2021 and June 2022 would determine the amount of any additional compression dollars.

The first $500 million available would remain in general revenue. Any amount above $500 million would go equally to general revenue and additional school property tax rate compression. The maximum amount of available revenue used for additional compression would be $2 billion.

In order to access the additional maximum $2 billion for compression, in June 2022 the comptroller would have to certify a $12.35 billion ending balance for Fiscal Year 2023 over the August 2021 estimate of $7.85 billion.

As “compression,” Senate Bill 1 would only provide a temporary reduction in property taxes for one year. Sadly, no legislation has come forward in the Special Session to provide permanent reform of Texas’ antiquated system of taxation.

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