86th LegislatureIssuesState HouseTaxes & SpendingOverview: House Bill 2, Texans, and their Property Taxes

House Bill 2 is postponed until April 30, after house exempts school districts and other special taxing units from the bill.
and April 29, 2019
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With its companion bill — Senate Bill 2 — having already been approved, the Texas House’s stab at property tax reform will soon come to the floor for debate. Like its Senate version, House Bill 2 places a percent increase cap on property tax collecting bodies before triggering a ratifying election. Like the original version of SB 2, that cap is placed at 2.5 percent — but unlike the Senate version, HB 2 exempts hospitals, community colleges, independent school districts, and emergency services from the election trigger threshold.

The current threshold allows voters to petition for a referendum if an increase is over eight percent in a given year. In addition to the tax rate cap, an exemption could allow certain entities to raise $250,000 in new property taxes in a year, regardless of the percent increase that would create. This new revenue enrichment provision would apply to any entity that brings in less than $7,142,857.14 per year in property taxes. Meaning, the percent increase threshold of 3.5 percent would not apply.

The exemption amount would take effect in 2020 and vary by year based on the state comptroller’s evaluation.

The House version, like SB 2, does not explicitly cut property taxes, but rather restricts their ability to grow year by year. HB 2 has received similar public support from Texas state officials as its Senate counterpart.

Lt. Governor Dan Patrick said in a statement released on January 31, “The Governor, the Speaker and I are united to address the number one priority of Texans across the state — reducing the escalating growth of property taxes.”

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On Twitter, Speaker Dennis Bonnen said he was “very proud” of the effort led by Rep. Dustin Burrows (R-Lubbock) to address Texans’ rising property taxes.

Burrows suggested on April 24 that HB 2 will be substituted with SB 2 and passed through committee in the days ahead.

The issue of property tax reform has endured its share of controversy this legislative session, as evident by the arduous levels of process and debate HB 2 has withstood thus far.

The Ways and Means committee voted HB 2 out of committee after a substitute proposed by Representative Jim Murphy (R-Houston) was adopted, exempting school districts and other special taxing units from the bill.

The committee substitute was offered in the early hours of the morning on March 28 following the passage of HB 1, the House’s version of the state budget.

Members of the Texas Freedom Caucus, arguably comprised of the most conservative members in the House, have been known to historically pull their Republican-majority chamber further to the right. They have been vocal about their desire to see substantial property tax reform pass this legislative session.

The caucus issued a Facebook statement on April 10, stating “Significant, lasting property tax relief is our mission. We agree with the Republican Party Platform which calls for a broad-based consumption tax to replace the public school maintenance and operations property taxes.”

Democrat members of the house are mostly in opposition to the bill, citing public school funding and local government tax burdens as their concerns. The Texan reached out to Rep. Trey Martinez Fisher (D-San Antonio), who refused comment and Rep. Eddie Rodriguez (D-Austin), whose office did not provide further comment on its opposition. Both sit on the Ways & Means Committee overseeing the bill.

Only one Democrat on the committee voted for the bill, Rep. Ryan Guillen (D-Rio Grande City), who also serves as the vice chair of the committee.

Additional drama ensued on April 11, when Rep. Briscoe Cain (R-Deer Park) publicly stated that he was under the impression that Governor Greg Abbott would not sign the bill without ISDs included under the 2.5 percent cap. Since then, debate on HB 2 has been delayed three times by Chairman Burrows.

Reconsideration of the bill is currently scheduled to take place on Tuesday, April 30.

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Brad Johnson

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.