AUSTIN, TX – After several weeks of postponing debate and waiting for the Senate to pass their plan, the Texas House passed a sweeping property tax reform plan Tuesday after a 6 hour debate. The bill will now head to conference committee with the Senate for negotiations. Last Friday, the House Ways & Means Committee tied the bill’s passage to the Senate passing the major piece of legislation on school finance, House Bill 3, and forewent debate on their own bill by substituting its language into Senate Bill 2.
The bill sponsor, House Ways and Means Committee Chair Dustin Burrows (R-Lubbock), said SB 2 as substituted “sheds light on who is raising their taxes and by how much” and “gives taxpayers more control over the process.”
Over four weeks ago, the Ways and Means Committee passed HB 2 following an 11 hour marathon debate on the budget. The amended committee substitute had some concessions to appease smaller taxing units. Community colleges and hospital districts are exempt from the 3.5 percent property tax revenue growth cap. These provisions remain in the House’s committee substitute of the SB 2, but not in the Senate’s version of the same bill.
Initially, the House differed from the Senate in exempting school districts from the property tax revenue cap despite them levying the bulk of what shows up on taxpayers’ property tax bill. In response to critics, Chair Burrows brought school districts back in the bill in a “symbolic” gesture. Since the Education Code governs school districts’ levying of property taxes, which is addressed in the school finance reform plan, SB 2, which changes the Tax Code, has no effect. HB 3, the vehicle for school finance reform, was voted out of the Senate Education Committee on Wednesday morning and contains a provision compressing school property tax rates by eight cents the first year and 15 cents for subsequent years across the board.
According to the Texas Tribune, “If lawmakers choose to cap [school] districts’ funding in a way that ties their hands to raise local tax revenue they’re entitled to, the state must fill in the gap.”
Another element of the latest version of the bill that contrasts with what was passed in the Senate is the removal of the carveout for $15 million jurisdictions. This means the 3.5% rollback rate will apply to all cities and counties. In the Senate’s version of the bill, those districts, mostly rural, were exempted from the bill’s provisions but could opt in should they choose to do so.
The House’s version of the bill also allows taxing units to “bank” unused revenue growth from years they fall under the 3.5% cap for five years allowing them to go above the 3.5% trigger in the same time period.
180 amendments had been pre-filed on HB 2 for the original date of its debate on the House floor. However, because the House leadership decided to vote on SB 2 instead, there were less than a third fewer amendments. Most amendments from Democrats failed, many of which included attempts to exclude different city and county expenditures from the revenue growth formula.
Notably, one amendment from Rep. Charlie Geren (R-Fort Worth) was adopted that would require representatives of taxpayers on property tax protests to only be licensed attorneys on a contingency fee basis, potentially putting property tax consultants like Sen. Paul Bettencourt (R-Houston) out of business.
SB 2 passed by a 107-40 vote margin. Readers can see the breakdown of the votes here.