HB 2 (Meyer) Property Tax Relief Act – Relating to providing property tax relief through the public school finance system and property tax appraisal and administration. & HJR 1 (Meyer) – Proposing a constitutional amendment to authorize the legislature to limit the maximum appraised value of real property for ad valorem tax purposes and to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations.
Summary
- Reduces the Maximum Compressed Rate (MCR) floor by $0.15 cents.
- Requires tax assessors to provide escrow accounts, at the request of property owners (currently optional and at discretion of tax assessors).
- Reduces the annual appraisal cap for ALL real property to 5% per year.
Features
- Total cost Property Tax Relief Act for 2024-25: $12 billion
- Combined with $5.3 billion appropriated in HB 1 to address ongoing tax rate compression, results in a total tax relief package of $17.3 billion.
- The $0.15 reduction in HB 2 combined with the $0.10 compression in HB 1 results in just over $0.25 total tax rate compression by FY25.
- The average annual savings for a homeowner in a $350,000 home is $461 in FY24, growing to $590 in FY25 (savings averages will vary by district).
- Reduces the number of school districts in recapture from 241 in FY23 to 211 in FY25, reducing total recapture payments by $4.5 billion for the 2024-25 biennium.
Advantages of Reducing Appraisal Caps
- Reducing the appraisal limit of 5% – and applying it to all property – will protect homeowners and businesses from the shock of rapidly rising property values, similar to what much of the state experienced the last two years.
- Reducing the cap will provide stability and predictability to homeowners and businesses, making it easier to plan for future investments and encourage economic growth.
- Applying a reduced appraisal limit to all property will prevent the ability of local governments to transfer a greater tax burden from homeowners to commercial property.
- While an increased homestead exemption will provide some relief to homeowners, a lower broad-based limit on appraisals will provide significantly more protection for homeowners and businesses against sudden increases in property values, as well as more durable property tax relief in the future. A fixed dollar amount homestead exemption does not keep pace with rapidly rising property values.
- Reducing the appraisal limit for all property will not distort market prices, which are based on supply and demand, nor will it distort demand based on factors like population growth, employment, and economic growth.
- Reducing appraisal limits for all property will also more significantly reduce the growth of local governments and property taxes, especially local taxing authorities unwilling to reduce tax rates in the future.