How to cut Texans’ taxes by more than $11B unleashes GOP dogfight in Austin

AUSTIN — Senate and House leaders are fighting passionately over a huge priority for Texas Republicans this year — how to cut taxes for homeowners.

In the past week or so, Lt. Gov. Dan Patrick ramped up efforts to push the Senate’s plan for increased homestead exemptions and rate cuts on school property taxes.

He’s bashed a House approach that wold tighten caps on annual property appraisal increases and pack all of this year’s tax relief money into more deeply cutting school property tax rates.

“Their math is terrible,” Patrick told s this week, speaking of House GOP leaders.

House leaders defended their plan as good for older Texans and all owners of real estate.

The state has a huge revenue surplus, and both chambers want to tap it for big property tax cuts, as Gov. Greg Abbott pledged in his re-election campaign last year.

After inflation and ongoing tax-cut obligations from a 2019 relief package are factored in, the two plans don’t quite match GOP lawmakers’ rhetoric about how this year’s thrusts would shatter all records.

Texas was already set to increase school tax relief in the next two years by $5.3 billion. Lawmakers are funding that and then putting an additional $11 billion to $12 billion into homeowners’ and businesses’ pockets. Longtime tax-policy experts agree that the proposed cuts should be more noticeable than some past ones if a deal can be cut by the two chambers.

While both plans would deliver lower school tax bills, the Senate’s, at least initially, would save more for the owner of an average market-value home in the Dallas school district.

The owner of a $300,000 home, paying the average school tax rate in the state, would save $760 in property taxes due for 2024 under the Senate’s plan, according to the Texas Taxpayer and Research Association.

The House’s cuts would yield a $650 savings, the business-backed tax research group estimated. For those 65 and older, the Senate shaves $945; the House, $625.

In the Dallas school district, where last year the average single family home was worth $388,639, The News found decreases for under-age-65 owners of such a home would be $829 in 2024 under the Senate plan; and under the House’s, $774. For 65 and older, the Senate trims $955; the House, $662.

Dallas GOP Rep. Morgan Meyer, the House’s top tax-policy writer, noted that the Texas Taxpayer and Research Association has endorsed the Senate’s plan.

“They’re a hired tax lobbying firm,” he said.

Dale Craymer, the association’s president, declined to comment.

Meyer defended the House’s plan, which would cut an additional 15 cents per $100 of assessed value from school taxes. Under a 2019 law, those rates are going to go down by 10 cents over the next two years.

‘It’s a seesaw’

The Senate’s plan would cut an additional 7 cents per $100 of assessed value from school taxes, beyond the dime of extra relief that current law requires. The Senate would raise the homestead exemption on school taxes from $40,000 to $70,000 for all homeowners who qualify. Homeowners ages 65 and older and the disabled would see their additional exemptions jump from $10,000 to $30,000.

The Senate wouldn’t change appraisal caps, a braking mechanism on tax-bill creep that Texas voters initially blessed in 1997. The House would by tightening to 5% an annual cap on appraisal bumps, which is set at 10%.

The House wants to ask voters this November not just to lower them but expand them to all types of real property, including commercial buildings, second homes, farms and timberland. Appraisal caps affect the taxable values for all taxing jurisdictions, not just schools.

They are opposed by some business groups, which say they distort markets by encouraging people to hold on to property.

Patrick said that after the Legislature in 2019 imposed a different kind of limit — revenue caps — on schools, cities and counties, the limits on appraisals became less important.

“For the first time in decades, taxes are actually down because people got their higher appraisal bills last year, but when they got their tax bill, their tax bills were down,” he said. “Because it’s a seesaw — as the value goes up, the counties and cities, and school districts have to stay at 3.5% and 2.5%,” respectively, because of the revenue limitations, he said.

Tightening appraisal caps runs risks, Patrick said.

“You have stagnant growth in people moving and you have less homes being built, whether it’s a used home or a new home,” he said.

“If you’re a senior and downsize, which most people do, you can end up paying more taxes for a smaller house,” because of suddenly having to pay tax on a property closer to market value, he said.

‘Dads even pulled me aside’

Meyer, who runs the House Ways and Means Committee, was joined by two colleagues who met with a reporter in a meeting arranged by the office of House Speaker Dade Phelan, R-Beaumont. A Phelan spokeswoman declined a request to interview the second-term speaker.

Meyer and Reps. Cody Harris, R-Palestine, and Richard Raymond, D-Laredo, said the House shouldn’t retreat from its appraisal cap idea.

Just last weekend, constituents hotly complained about getting new appraisals in the mail, the three recalled.

“My ears are still ringing,” Harris said.

At Meyer’s oldest daughter’s pre-prom party, “a couple of dads even pulled me aside,” he recounted.

“We have to do something about this,” Meyer said they told him.

While appearing to be bolstered by some initial analyses by outside groups of the two chambers’ plans, Patrick nevertheless has launched a PR blitz. Patrick, now in his third term presiding over the Senate, is a former TV sports reporter and radio talk-show host.

In recent TV interviews, he shook fistfuls of dollars to illustrate annual savings he said would accrue from the Senate plan to senior citizens ($1,000 held in his left hand) and under-age-65 homeowners ($800 in his right).

“Hope you can see the money right there,” he told CBS-Channel 11 reporter Jack Fink. “I’m holding $1,000 in my hand.”

Patrick has a good reason to be selling the Senate plan hard, said Brandon Rottinghaus, a University of Houston political scientist. The House’s plan has an advantage — simpler messaging, Rottinghaus said. Phelan can keep a low profile, he said.

“Texans’ biggest complaints about property taxes are skyrocketig appraisals,” the professor said. “That has been the discussion for years, and Phelan’s plan directly targets that.”

The difficulty for Patrick in selling his plan gets at a saying some attribute to former President Ronald Reagan. “If you’re explaining, you’re losing,” Rottinghaus said.

But Rottinghaus noted that it would be unwise to underestimate Patrick.

“You can’t go to sleep on Dan Patrick,” Rottinghaus said. “He’s a master marketer. He understands how to connect, especially to conservative Republicans.”

Meyer, asked if compromise is possible, replied, “Absolutely. We are here to work with the Senate. That is what our constituents expect us to do.”

Patrick said parts of the two chambers’ plans are negotiable, such as how deeply school-tax rates are cut or the $1.5 billion the Senate would spend to ease other types of taxes on business.

“We can work with him,” he said of Phelan. “But giving up homestead exemptions for an appraisal cap? That not only wrecks our current system and does nothing for seniors — 40% of the homeowners almost — and does nothing for many people whose appraisals won’t go up every year — I can’t take that away from a senior.”