(The Center Square) – The Texas Senate unanimously passed a bill Tuesday to provide property tax relief. That afternoon, House Speaker Dade Phelan said the House wasn't considering it. The House passed its own bill, and Phelan said the special legislative session was over in the House.
The governor issued a statement praising the House bill, as did several industry leaders. They did so after the legislature passed a bill, HB 5, resurrecting a sunsetted Chapter 313 tax abatement program and revising it to provide hundreds of millions of dollars in tax breaks to multi-million- and billion-dollar corporations. The program enables corporations to not pay school districts property taxes as an incentive to do business in Texas. However, residents end up paying more in property taxes and most corporations would still do business in Texas without the tax breaks, an analysis found. Meanwhile, the legislature couldn't agree on how to provide property tax relief to homeowners burdened by inflation and skyrocketing tax rates over the past two years.
At an event hosted by the Texas Public Policy Foundation on Tuesday, Lt. Gov. Dan Patrick said he wasn't backing down on including increased homestead exemptions as part of property tax relief. After Phelan's move, on Wednesday, Patrick issued a statement, saying, “If the House thinks after abandoning the Capitol, and walking out on the Special Session, the Senate is going to pass their ‘take it or leave it' property tax bill without a homestead exemption, they are mistaken.
“The Senate is still working. The House can return. Our bill legally fits the call. Our bill is simple – dedicating about 70% of the $17.6 billion to compression for all properties, with the remaining 30% going to a $100K homestead exemption.
“The House already unanimously passed the homestead exemption in the regular session,” he noted. “Now the House All-Compression Plan takes the homestead exemption away. No State Representative ever campaigned on taking money from homeowners to give to businesses.
“The Senate plan gives $1,250 – $1,450 to homeowners. The House's All-Compression Plan only gives about $740 in tax saving to homeowners.”
Prior to the Senate and House votes on Tuesday, Patrick presented his tax relief plan at TPPF. He said the Senate gave four tax proposals to Phelan over the last week to help small businesses. Phelan rejected all of them.
Patrick also explained the cost to taxpayers if the House's 5% appraisal cap for all property were implemented. The annual cap, according to the Legislative Budget Board, would cost $750 million in 2025 and increase to $5.3 billion in 2029, with costs growing by another $1 billion per year after 2029.
Nearly all organizations came out against Phelan's plan, Patrick said, “because it distorts the market. The speaker wanted it on all businesses, all properties, which is unsustainable.” Even 8%, which they were willing to negotiate, would cost $12 billion, he said.
In one meeting with the governor and Phelan, Patrick said he asked Phelan, “who would pay for this?” Phelan replied, “the school districts would just have to spend less money,” according to Patrick.
Referring to the House, Patrick said, “They never brought us any numbers in the entire time of the session,” he said. “We showed him how his math didn't work.”
At the end of the meeting with the governor, Patrick said Phelan said if he couldn't get the appraisal cap for everyone, he wasn't going to negotiate property tax relief. He was also taking homestead exemptions off the table even though the House had just unanimously agreed to increase the homestead exemption.
“I couldn't figure out why he was so hooked on the appraisal cap,” Patrick said. But in one of their meetings, Phelan said, “I own a lot of property. Not that it's about me,” Patrick said recounting the conversation. “If you go to Phelan Investments online, they own everything, for decades, four generations of owning property. If you have a cap on property, the taxes go through a triple net lease. But if you can hold your value down and hold property for decades, and you sell it one day, it's a whopping, whopping profit.
“I'm not saying he was doing that to benefit himself, but I could never figure why he wanted to do that,” Patrick said.
Requests for comment about any of Patrick's comments were not immediately returned from the Speaker's Office.
Patrick also presented a homeowner tax relief comparison. The compression plan advocated by the governor, and now speaker, provide $710 in property tax relief in the first year and $756 in the second. The Senate's plan, including compression and the homestead exemption, provides nearly double: $1,416 in the first year and $1,462 in the second.
The only reason the Senate supported HB 5, he said, is because it was an incentive to help dispatchable energy companies. But the bill includes exemptions, Patrick noted – hundreds of millions of dollars for ten years.
“So exemptions are good enough for big business but not good enough for a homeowner who's struggling?” he asked. “I will not step back from this. I might be the last guy standing, but I will be the last guy standing. Homeowners deserve real property tax cuts. That's a combination of compression and homestead exemptions.”