Texas senators unanimously approved an ambitious plan, proposed by Lt. Gov. Dan Patrick’s, to cut real estate property taxes. It aims to invest billions of state dollars into public schools while also offering larger tax breaks for homeowners and business owners. The $16.5 billion plan consists of three priority bills that seek to provide the promised property tax relief to millions of Texas homeowners.
Sen. Paul Bettencourt, a Houston Republican and Patrick’s property tax point person, lauded the package as an “off-the-charts” incredible property tax relief for homeowners in The Lone Star state. Before the legislative session began, Republican leaders highlighted the need for the Legislature to use a portion of the state’s historic surplus of almost $33 billion to bring down property taxes, and Patrick’s proposal is the Senate’s solution.
One of the Biggest Real Estate Property Taxes Cut In Recent Years in Texas
The package’s most well-received component among senators is Senate Bill 3, which proposes to increase the homestead exemption for school districts. Seniors can take advantage of an additional $20,000 boost, while homeowners can save an additional $341 on their yearly tax bills. The proposal raises the amount of a home’s value that can’t be taxed from $40,000 to $70,000, providing significant tax relief for the state’s homeowners.
All three bills passed, with Democrats and Republicans working together to approve the legislation. Senate Bill 4, which passed with less certainty, requires the state to invest at least $5.38 billion in public schools while also cutting school property tax rates by seven cents per $100 in property value. The state budget writers have separately proposed $5.3 billion for property tax cuts over the next two years, which makes up the largest percentage of Texans’ property tax bills.
Not Anyone Is Convinced by This Real Estate Property Taxes Cut
Some Senate Democrats expressed skepticism about the proposal, warning that Texas may not have the same abundance of federal stimulus funds to offset any economic downturn in the future. State Sen. Nathan Johnson, a Dallas Democrat, expressed concern that the state may have to raise sales taxes if that occurs. State Sen. Sarah Eckhardt, an Austin Democrat, agreed with Johnson’s sentiments, saying that it could cause starvation for the state’s public education system if the state were unable or unwilling to pay.
However, Sen. Bettencourt downplayed such skepticism, saying that Texas’ economy is thriving, and voters will ultimately decide the measure, which will appear on the ballot box as a proposed constitutional amendment. Despite such skepticism, no Democrats voted against the bill.
SB 4 seeks to reduce payments from property-wealthy districts through the “Robin Hood” recapture program. The program requires districts to give any tax surplus they collect to the state so that it can support “property-poor” districts that cannot raise sufficient funds through taxes.
Some school districts, like the Austin Independent School District, have paid the state nearly $800 million in the previous fiscal year. According to Ed Ramos, the chief financial officer at Austin ISD, if SB 4 becomes law, the district would have to lower its rate to tax property owners for its maintenance and operations. As a result, the state would cover the district’s shortfall, and the district’s Robin Hood payments would decrease.