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Property tax reform is on the agenda, but what will it look like for Texas?

Home values have skyrocketed within the context of a nationwide housing shortage, and high property taxes reflect those lofty price tags.
Home values have skyrocketed within the context of a nationwide housing shortage, and high property taxes reflect those lofty price tags.

Assessment practices as well as rates and exemptions likely to be front and center in this year's legislative session.

It is generally understood that Texans dislike taxes.

So, it falls on the Texas Legislature to seek ways to relieve Texans of at least some of their tax-paying obligations by finding ways to fund state and local governments through other means.

To that end, the Legislature is taking aim at what University of Houston political science professor calls the “most hated tax in Texas.” That would be property taxes, said professor Brandon Rottinghaus, an avid follower of Texas politics and government.

What are the chances of the 2023 Legislature enacting property tax relief this year, on a scale of one to 10, with one being “not a chance in hell” and 10 being “absolute certainty of relief”?

Rottinghaus said without hesitation, “It’s an 11.”

“Historically, it’s been a challenge to produce tax relief,” Rottinghaus said, adding that property taxes “are assessed at the local level.” This year, though, the Legislature is entering its 2023 session with an abundance of cash left over, Rottinghaus said, and it’s a good bet that lawmakers will be able to use some of the $33 billion surplus estimated by Texas Comptroller Glenn Hegar to help Texans pay their property tax bills.

“Thirty-three billion seems like a lot of money,” Rottinghaus said, “but it’s only a fraction of what would really help” bring tangible relief.

Legislators have sought in previous sessions to cap the property values that local appraisal districts can assess, Rottinghaus said. There also are attempts made to increase the homestead exemptions that Texans enjoy already, he said. Rottinghaus said that Lt. Gov. Dan Patrick, who presides over the Texas Senate, wants to increase the exemption from $40,000 to $70,000. “I am not aware of what’s coming out of the House of Representatives on that,” Rottinghaus said.

Rottinghaus predicts that whatever property tax relief comes out of the Legislature this year could bring an estimated $300 to $500 in tax savings to the average Texas household. “That’s not a lot,” he said, “but at least it’s something.”

He also added that the surplus “won’t last forever,” and that property tax relief is a “long-term process” that could require structural changes in the way “we assess property taxes.”

The issue is likely to draw plenty of attention from most, if not all, 181 legislators in both houses of the Legislature. The Texas Tribune reports:

“Lawmakers on both sides of the aisle have filed dozens of bills aimed at curbing the state’s high property tax burden. Texas Republicans, who campaigned heavily on cutting homeowners’ exorbitant property tax bills, are particularly focused on the issue.” The Tribune notes that Gov. Greg Abbott made a commitment to using part of the budget surplus to provide relief.

“But Abbott faces resistance from top Republicans in the Legislature,” the Tribune reports. “Lt. Gov. Dan Patrick and House Speaker Dade Phelan are both wary of spending too much of the surplus – considered a once-in-a-lifetime pot of cash – on property tax cuts,” the Tribune stated.

One Northeast Texas legislator, state Rep. Gary Van Deaver, R-New Boston, declared property tax relief as one of his top priorities in this legislative session. “I am not carrying any legislation,” Van Deaver said, “but as a member of the House Appropriations Committee, I am taking a good look at the various bills that others have filed.”

“I don’t know which of them will get across the finish line,” Van Deaver said, “but my main concern is that property tax relief is truly beneficial and is sustainable.”

Van Deaver said attempts to “cap tax rates” don’t work, because appraisal districts “have a tendency to increase valuations, which defeats the purpose of capping rates.” Van Deaver said he wants to see “something that caps the amount of money that appraisal districts can assess.”

He added that “people who buy property need to have confidence that they can hold onto that property, that they can keep it.”

Van Deaver said he is reluctant to “dismiss any legislation right now. Anything can be improved and made more agreeable.” He said he wants to “wait and see what develops.”

He said the Legislature has budgeted money to pay for property tax relief and as a member of the House Appropriations Committee “I’ll be taking a hard look at what’s being considered.”

Van Deaver has some support on his notion of reigning in property appraisal districts. As the Texas Tribune reports: “Appraisal caps sound really good,” said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association. “Everybody likes the idea that their appraisal is going to be less than it actually is. But somebody’s got to pay for that and it’s everyone else that’s left in the basket.”