Senate’s property tax reform plan gets Senate vote after 2 months of no movement

prop tax passes out of senate

Pictured: Sen. Kel Seliger holding the Senate Rules book during debate on SB 2

After two months of being stalled following passage from the newly-created Texas Senate Property Tax committee, the Senate’s plan for property tax reform – a 2.5 percent property tax revenue cap – received final approval from the Senate on Monday and now heads to the House.

The Texas Tribune reported on why this happened.

Ordinarily, bills are considered in the order they were cleared from committee, called “regular order of business.” However, so far, the Senate goes “outside the regular order of business” for bills, requiring 19 votes, or a three-fifths majority to suspend the rules.

Procedurally, this is how it works: a Senate committee passes an inconsequential bill, called a “blocker bill”, at the beginning of session and leaves it in place to block consideration of legislation that doesn’t have at least 19 votes.

For the past two months, Senate Bill 2, authored by Sen. Paul Bettencourt (R-Houston), has not been able to muster up 19 Senators – that is, until today. This comes several days after the Lt. Governor threatened the “nuclear option” of bypassing the 19-vote rule and a week after the “Big Three”, Governor Greg Abbott, Lt. Governor Dan Patrick and House Speaker Dennis Bonnen, announced their support of the proposal to raise the sales tax by one cent in an effort to reduce property taxes.

Sen. Kel Seliger (R-Amarillo), the lone Republican senator holding out for the past two months on bringing the bill to a floor vote, gave an 11-minute speech qualifying his decision to vote in favor of suspending the rules to bring it to consideration. He decried the Lt. Governor’s threat of the nuclear option as discrediting the body and making the process too partisan.

“What makes us any different from Washington, DC,” asked Sen. Seliger. He emphasized the importance of procedure and how the Senate’s process “underscores that we must be willing to compromise.” While he said he will vote in favor of suspending the rules to bring SB 2 to the floor, he promised to vote against the bill. He noted that the bill would be heard and passed even if he did not vote to bring the bill to the floor.

Sen. Paul Bettencourt (R-Houston) introduced a floor substitute to the bill with a few significant changes from the committee substitute passed two months ago. He said his bill will be “protecting people in their homes and businesses.”

The most controversial element is the 2.5 percent rollback rate for property tax growth. For school districts, this rate as originally proposed remains unchanged in the latest version of the bill. On the other hand, cities, counties, and special taxing districts now have a 3.5 percent trigger on the rate at which they levy property taxes, which would apply to new revenue from existing properties.

In current law, the rollback rate for property taxes is 8 percent, meaning if the new rate, set by taxing entities, is above 8 percent of the previous rate, they’ll need voter approval.

The bulk of the language deals with appraisal reform remains unchanged and is widely supported by legislators, taxpayers, and local government officials from across the state. Sen. Bettencourt said under his bill, individual counties’ appraisal districts for the first time “will be operating under the same guidelines across the state.”

Bettencourt praised Travis County Appraisal District officials for inspiring many of the transparency reforms to the appraisal process in SB 2.

Democratic senators proposed over two dozen amendments, ranging from exempting certain taxing units from the property tax revenue cap and providing credits for different elements of the budgets of small taxing units (e.g. public safety) to making the 3.5 percent rollback rate effective for five year periods should the voters of the taxing district pass it so that cities and counties can plan long-term. All of their amendments were either withdrawn, tabled, or failed adoption, largely on party lines. For several of those withdrawn amendments, Bettencourt assured amendment authors a hearing in his Property Tax committee tomorrow should they file the language as a late bill.

Sen. Kirk Watson (D-Austin), who proposed an early amendment, shared a concern that school districts be taken out and placed into this session’s school finance bill, either HB 3 or Chair of the Senate Education Committee Larry Taylor’s (R-Friendswood) SB 4. Bettencourt rebuffed this concern, saying school districts’ property taxes make up more than 50 percent of the bill should remain.

Several Democrats and Sen. Seliger raised the issue of the costs to local government should the rollback rate of 3.5 percent be applied.

The only amendment adopted was from Sen. Pete Flores (R-Pleasanton). It includes indigent defense, an unfunded state mandate to counties, as a credit from the revenue growth calculation. During the discussion of his amendment, Bettencourt assured Democrats the bill as filed also included indigent health care as a credit.

Following more than three hours of debate over two dozen-odd amendments, the Senate’s property tax reform plan passed 18-12, with Sen. Seliger joining the Senate Democrats in voting against it, and Sen. Eddie Lucio (D-Brownsville) abstaining. 

After adjourning for the day and starting the “legislative day” shortly thereafter, SB 2 was brought to the floor for third reading. Democrats used their time to criticize the partisanship of the process and oppose the bill. Republicans defended the bipartisanship of the issue and thanked Bettencourt and the Lt. Governor for helping them follow through with their campaign promises to their constituents to bring property tax relief, despite the bill not lowering anyone’s tax bills.

The final vote for SB 2 was 18 in favor, 12 against and one abstention from Senator Lucio again.

Under current law, the rollback rate for property taxes is 8 percent, meaning if the rate is set above 8 percent of the previous rate by a taxing entity, they’ll need voter approval. Bettencourt’s bill reduces that election trigger rate.

HB 2, the companion bill to SB 2, is slated for a debate on the House floor next week. The latest version of HB 2 differs from SB2 in that it exempts hospital districts, community colleges, emergency service districts and school districts from the 2.5 percent property tax revenue cap.

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