Today, in the sun-baked parking lot of Wally’s Burgers, Governor Greg Abbott — flanked by Lt. Governor Dan Patrick and Sen. Charles Perry (R-Lubbock) on his right and Speaker Dennis Bonnen and Rep. Dustin Burrows (R-Lubbock) on his left — signed this session’s long-awaited property tax reform legislation into law.
Wally’s owner Robert Mayfield began the ceremony, stating “Wally’s is an excellent example as to why property taxes have become burdensome.” He then added, “This year, Wally’s property taxes are going to go up an additional 44 percent, which is an extra $8,000 we’re going to have to pay.”
Mayfield also stated that since 2016 their property taxes have gone up 80 percent. “That’s not sustainable,” Mayfield concluded.
In his 2019 State of the State address, Governor Abbott declared addressing “skyrocketing property taxes” an emergency item. The legislature, in turn, made it their top priority.
The signing of HB 3 yesterday, Abbott stated, “will lead to, on average, a reduction of about five percent the first year and 10 percent the second year.” That buydown is only enacted through the next biennium, and thus future increases in property taxes would more or less negate the buydown.
However, HB 3 places a cap on the increase in rates for school districts and local governments and includes an efficiency audit for ISDs.
“Skyrocketing property taxes have put businesses out of business,” Abbott told the gaggle gathered outside of the burger joint.
At the press conference, Abbott stated that school districts have a 2.5 percent hard cap — meaning they do not have the ability to ask voters for an increase higher than that set rate. Meanwhile, localities are capped at 3.5 percent but do have the ability to ask voters for more.
The Texan interviewed Rep. John Zerwas (R-Richmond) — who was present for the signing and chairs the Appropriations Committee in the House — after the ceremony, stated that he, as well as others, thought the election trigger was included for ISDs.
But the Governor stated today that the provision was not included in the final version, though it was included in preliminary versions.
Patrick said, referring to the effective tax rates, “When we cap our cities and counties at 3.5 percent, if the property values go up, they have to lower their rates.” He continued, “I think on average you’ll see property taxes go down half or more.”
Patrick then went on to defend his “nuclear option” threat from mid-April, saying business owners like Wally’s Robert Mayfield “[don’t] care about the tradition or the rules of the legislature, [they] care about surviving in business.”
Speaker Bonnen added the transparency portion of the bill both “empowers and protects taxpayers.”
When asked about plans moving forward, Zerwas said, “In order to follow through on this property tax relief, there will have to be an additional revenue source to make the reform sustainable.” He did mention the sales tax swap, proposed earlier this session by state leaders as a method to buy down property taxes, may come up again in conversation.
Abbott indicated — and Zerwas confirmed — that there is an appetite for moving towards consumption-based revenue sources, which is part of the Texas Republican Party Platform.
Zerwas also mentioned diversifying whatever substitute revenue source is proposed, in order to spread out the funding across various other sources rather than just relying on the sales tax.
Notably, Sen. Paul Bettencourt (R-Houston), SB2’s original author, was not present for the signing. In late April, he famously broke rank with his chamber’s leader, Lt. Governor Patrick, and opposed the sales tax swap.
The Texan reached out to get a comment from the Lt. Governor. Sherry Sylvester, Senior Advisor to the Lt. Governor, could not be reached and the Lt. Governor’s press office did not pick up.
The Texan received the following statement from Sen. Bettencourt’s office: “The clear winners here are the taxpayers of Texas. I am proud of the work I did on their behalf as the Author of Senate Bill 2.”
Texas’ state-leaders enter the interim seemingly pleased with the results yielded this session on big-ticket items like property tax reform and school finance. Their sights now turn to the looming 2020 elections.
Correction: An earlier version of this story stated SB 2 contained the 2.5 percent cap on school districts. It is actually in HB 3. The story has been updated to correct the error.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.