State HouseState SenateTaxes & SpendingOverview: Senate Bill 2, Texans, and their Property Taxes

With the passage of Senate Bill 2, the Texas Legislature is one step closer to curtailing property tax increases.
April 20, 2019
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Texans rated ballooning property taxes as their biggest concern prior to the 2018 election — topping both border security and healthcare.

A 2017 UT/Tribune poll found that Texans’ top legislative priority was lowering property taxes and another poll conducted last year, found over 77 percent of Texans — of all ideological stripes — either strongly or somewhat supported limiting the extent to which local governments can raise property taxes. This is the second straight session where property tax rates have been the number one concern for Texans. With that in mind, Sen. Paul Bettencourt (R-Houston) introduced the “Texas Property Tax Reform and Relief Act of 2019” on January 31 as Senate Bill 2.

The original bill contained a 2.5 percent cap on all property tax increases. However, a debate on the Senate floor Tuesday saw that cap raised slightly to 3.5 percent for all non-school district taxing entities.

School districts remain at the original 2.5 percent cap in the current iteration of the bill. Going over that threshold would trigger an automatic election for voters to approve or disapprove the increase. In that regard, SB 2 would not cut taxes explicitly but would aim to lower the tax burden by restricting local entities’ ability to raise their respective property tax rate even further.

The nonpartisan Tax Foundation found that Texas had the sixth-highest property tax rate in the country three years ago, bringing in over $56 billion in revenue for the state in 2016 — a 40 percent increase since 2011.

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According to a study from ATTOM Data Solutions, Texas has since moved up to the third-highest effective property tax rate in the nation with a rate of 2.18 percent.

Currently, a family with a home at the median Texas value of $172,200, with a property tax rate of 2.18 percent, pays more than $3,000 a year in property taxes. Under SB 2, increases to that rate would be limited to roughly $90-$130 more each year — without voter approval. As it stands now, property tax rates can be increased eight percent each year without triggering an election. That’s a difference of around $170-$210 annually from SB 2’s rates.

Amendments that would exempt certain entities — such as community colleges, hospitals, and specific municipal services — all failed. However, an amendment by Sen. Pete Flores (R-Pleasanton) was adopted that allows indigent defense costs shouldered by counties to be implemented into the tax rate.

Other aspects of the bill include a “real-time tax rate notice” to promptly inform taxpayers of their proposed property tax rates; available recourse the taxpayer can take if the taxing unit is not upholding its responsibilities; a requirement for each county to have and maintain a website that keeps taxpayers informed about their property taxes; and cleaning up the appraisal process.

The bill was nearly stalled in the Senate after Sen. Kel Seliger (R-Amarillo) voiced his opposition to SB 2 and threatened to sink the legislation. Seliger eventually voted to bring the bill to the floor despite later voting against its passage.

Lt. Governor Dan Patrick had previously threatened to use the “nuclear option” that would reduce the vote threshold necessary for bringing SB 2 to the floor in an effort to get around Seliger’s opposition.

SB 2 has illustrated a repeated dynamic of the Senate this session: Republicans on one side, Democrats on the other, and Seliger often somewhere in the middle. Earlier this year, Seliger broke with Lt. Governor Dan Patrick’s agenda, and his Republican colleagues, when he voted against SB 17 — a religious liberty bill that would allow occupational licensing officials to cite “sincerely held religious beliefs” to opt out of activities that could otherwise jeopardize their licenses. That bill also saw Sen. Eddie Lucio (D-Brownsville) cross the aisle as the lone Democrat voting in favor of implementing such protections.

How Patrick and Seliger’s relationship further develops could determine how many straight party-line — or nearly straight party-line — votes occur as the session nears its frantic end.

Things are only likely to get more complicated in that regard as discussions over raising the state sales tax to “offset” the property tax reduction take shape.

SB 2 has now moved to the House and is currently being deliberated in the Ways and Means Committee. The House is scheduled to take up their own version of property tax reform House Bill 2, on April 24.

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Brad Johnson

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 watching and quoting Monty Python productions.

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