A tense environment has stirred in the Texas Legislature the past two weeks over the issue of property tax reform. Many Texans last year were upset at their rising appraisals, inflation, and other parts of the economy, that the Texas Legislature wanted to have meaningful property tax reform in the state. Texas Governor Greg Abbott ran on that platform.

With the end of the Legislative session and no plan for property tax reform, the Governor called a special session and the two chambers reconverged to deal with the issue. The Governor wanted “legislation to cut property-tax rates solely by reducing the school district maximum compressed tax rate in order to provide lasting property-tax relief for Texas taxpayers.”

The Texas House of Representatives unveiled their plan weeks ago, adjourned, and left Austin, trying to force the Senate into a take-it-or-leave-it deal. The House simply compressed school district tax rates and put forward the funding to send to schools to lower it. 

The Texas Senate finally unveiled its 18 billion dollar property tax reform package, complying with Governor Abbott’s mandate. The Senate, however, has created a three-pronged approach to property tax reform. All 31 senators signed onto the plan, believing that it is a plan the Senate, House, and Governor can all be happy with. 

The Senate’s plan reduces how much schools can grow their tax revenue from 2.5% down to 1.75%. The bill will provide school districts with state dollars to make up for the loss of funding. 

Another component of the Senate’s plan exempts more businesses from the franchise tax. The exemption from the franchise tax in Texas applies to businesses that make under 1 million dollars annually. The Senate’s plan raises that exemption to businesses that make under 2.47 million annually. 

Furthermore, the Senate applied their desire for property tax relief by increasing the Homestead Exemption up to $100,000. For those 65 and up, it’ll be $110,000. Voters will have to go to the polls to raise the Homestead Exemption Act.

Now the House and the Senate have to work together. This would require the House, which already adjourned weeks ago, to come back to Austin and compromise on a plan.

Currently, the House has set up a Committee to study property tax relief for Texans. In an article by NBCDFW, “the committee will evaluate the dynamic effects of compression, limits on taxable value, and homestead exemption increases to maximize savings…the viability and sustainability of eliminating the school maintenance and operations taxes by 2035; examine the historical rates of appraisal increases and recommend methods to reduce the tax burden of those increases on real property; and examine the long-term value of homestead exemptions in conjunction with the impact of appraisal increases.”