Texas Governor Calls Second Special Session On Property Tax Reform, But Progress Still Appears Elusive

Texas’ 88th Legislature began a second special session on property tax reform late Tuesday afternoon after a first special session concluded with the House and Senate passing different resolutions on Day One of a 30-day session, then calling it a day.

So far, things are not off to a markedly different start.

After vetoing more than 70 bills, citing the need to address property taxes as a priority, Gov. Greg Abbott issued a second special session proclamation, demanding the body meet once again to focus on cutting taxes by reducing school district tax rates. The proclamation came immediately as the first special session ended Tuesday.

On Wednesday, both bodies voted much the same as they did in the first special session. 

Abbott said compression of school district tax rates and creating a pathway to eliminate school district maintenance and operations property taxes, the primary source of revenue for teacher salaries and other school district operating expenses, are his top priorities for the session.

But the House and Senate haven't found a way to work toward either of those priorities thus far. They now have another 30 days to decide how to use a record $32.7B budget surplus to help lower property tax bills, The Texas Tribune reported.

This could include expanding the homestead exemption, meaning a larger proportion of home values would be exempt from paying school district taxes. That would have to be approved by voters, so lawmakers would have to pass the deal before an August deadline to get it on the November ballot, the Tribune reported.

Though both Republican-led, the House and Senate are seemingly at a standstill over the method they will accept to reform property taxes. 

The Texas House, led by real estate developer and Speaker Dade Phelan, are on the same side as Abbott in wanting to send $12.3B to school districts, making up losses from compressing property tax rates for all property owners across the board. This would provide a bigger benefit to wealthier homeowners and commercial property owners, according to The Texas Tribune.

The Texas Senate, led by Lt. Gov. Dan Patrick, is focused on giving greater relief to homeowners. The Senate plan would give more than two-thirds of the $12.3B to compressing the tax rate, but 30% would go toward boosting the homestead exemption from $40K to $100K, the Tribune reported. 

“Unless and until the House and Senate agree on a different proposal to provide property tax cuts, I will continue to call for lasting property tax cuts through rate reductions and working toward eliminating the school property tax in Texas,” Abbott said in a statement. 

Special sessions will only focus on property tax cuts until legislation is passed and reaches his desk, he said. 

Tony Trahan, a property tax consultant with KE Andrews, told CBS Austin that he doesn’t expect the elimination of the maintenance and operations taxes to materialize.

“I don't think that's going to happen,” Trahan said. “That's kind of his political push. And it's a good tagline to see the governor wanting to get rid of property taxes, but what he's trying to do is just work that number down as much as possible.”