Is Dan Patrick Right For Once?

In any given fight in the Texas legislature, you can usually count on Lt. Governor Dan Patrick to take the hardline conservative stance on an issue and House Speaker Dade Phelan to take the more moderate one. Weirdly, it’s Opposite Day when it comes to property tax reform.

Using some of the historic $32 billion tax surplus this year for property tax relief is a huge priority for Texas Republicans, but arguments over the final form have become bitter and contentious as the legislature moves into special sessions with no deal in sight. Initially, the House plan would have focused savings on capping growing appraisals, and the Senate plan would lean more on compression and raising the homestead exemption.

The appraisal cap has been consistent non-starter with Patrick, who has derided it as a “California” plan. While the lieutenant governor clearly meant that as a slur, he was also making a comparison to the Golden State’s similar Prop 13 passed in 1978. While the cap did reduce property tax increases, and there is some evidence it promoted more stable neighborhoods by incentivizing long-term residents, it also saddled new property owners with prohibitive taxes. This has driven a further wealth gap between people who already own property and those who do not.

The plan by Patrick and his top tax writer Sen. Paul Bettencourt (R-Houston) is, by comparison, much more progressive. Increasing the homestead tax exemption from $40,000 to $100,000 would see immediate benefits for homeowner tax bills. Further cuts would be extended to veterans and the elderly. To the extent that a tax reform bill dealing with the wealthiest half of Texans can be progressive, Patrick’s is.

Speaker Phelan seems to have abandoned his dreams of the appraisal cap, but is continuing to balk at the idea of raising the homestead exemption. The latest House Bill focuses instead on spreading tax cuts between residences and businesses. Patrick has said that this will dilute the tax savings for homeowners, and he is likely right.

However, a new challenger has entered the fight. Governor Greg Abbott, probably frustrated with a lack of progress on a gimme for the Republican base, has thrown in his support on the Phelan plan. Extending the property tax reform to commercial property could help small business owners, but it would also be a huge boon to massive corporations. It’s also of possible considerable monetary benefit to Phelan’s own company.

Now, Patrick is in the delicate position of having to fight the governor, a man he is usually in ideological lockstep with. He tried to thread that needle with a press conference appearance this week.

“This is a joke perpetuated by some people – not the governor – somebody reeled him into this, and he just said it,” Patrick said. “I’m not blaming him, he would not endorse this, the Governor is not going to endorse this. Are you kidding me? Spend every dollar on property taxes, where you have nothing left?”

Patrick is confident that if a homestead exemption bill can get passed by both chambers, Abbott would sign it. That said, the House recently adjourned in what seems like spite that the latest Senate bill pointedly kept the homestead exemption in place. They’ll have to come to a compromise eventually, as Abbott is empowered to call special sessions until he is satisfied the state’s business has been concluded.