Just last Friday, the “Big Three” convened a press conference to all-but-spike the football on their plan for a tax swap. The plan called for a one-cent sales tax increase that would “buy down” property tax rates in the future. Specifically, SB 2 implemented property tax increase caps of 2.5 percent on school districts and 3.5 percent on counties and municipalities and other taxing entities.
But the narrative quickly shifted when polling was released detailing the unpopularity of the proposed plan and a Legislative Budget Board (LBB) report showed an overall increase in taxes for households with income below $100,000.
The plan faced opposition even within the GOP-dominated Senate. Sen. Paul Bettencourt (R-Houston), the original author of the property tax reform bill, announced last week alternatives to increasing the sales tax. The Senate eventually stripped the sales tax increase provision from the House’s school finance bill (HB 3) before passing that legislation on Monday.
HJR 3 and HB 4621, proposed constitutional amendments to institute the sales tax increase, were postponed yesterday by Rep. Dan Huberty (R-Houston) until January of 2021. Speaker Dennis Bonnen followed that announcement by stating that the legislation was unlikely to pass in the Senate.
Both property taxes and school finance, which have been intrinsically tied together since the beginning of the session, are the stated top priorities for the Legislature this session. The collapse of the sales tax swap now moves the debate back to the drawing board as lawmakers consider other options for decreasing the property tax burden on Texans.
Separate, but not unrelated from property taxes, is the fact that a budget must also be passed before the session closes.
While the Legislature could always revive talks on the sales tax swap, for now, the proposal looks to be dead on arrival. And yesterday’s pronouncements certainly signaled that a special session may indeed be necessary to resolve these issues.
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 chairing the Edmund Burke fan club.