House Ways & Means met on July 11 to discuss the following property tax bills: HB 2 (Meyer), HB 3 (Geren), and HJR 2 (Metcalf). All bills were voted out of committee unanimously.
This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer.
HB 3 (Geren) Relating to the amount of the total revenue exemption for the franchise tax and the exclusion of certain taxable entities from the requirement to file a franchise tax report
- Geren – Increases franchise tax; removes requirements to those who do not pay this tax to file
- Raymond – What is the cost of this?
- $300m a year
HB 2 (Meyer) Relating to providing property tax relief through the public school finance system, exemptions, limitations on appraisals and taxes, and property tax administration; authorizing the imposition of a fee
- Meyer – $18b in total tax relief; reduced maximum compression to 10.7 cents
- $13b in total compression and includes a $100k homestead exemption
- Ensures non homestead $5m maximum value capped 20% for three years
- Requires 3 elected appraisal district members for counties 75k and larger
- Have some technical changes that will be made on the Senate side
- I&S hold harmless will begin September 1, 2023 to ensure any planned debt is eligible
- Section concerning the CAD board members will be effective January 1, 2024; additional option for filing fee that will be added
- Button – Some say this does not benefit renters, but benefits will flow through the entire system
- State will backfill for ISD taxes and everyone’s taxes will go down; landlords will be able to pass savings on to renters
- Turner – Tax equity note from the comptroller?
- No
- Turner – Could we get one?
- Would have to know the mechanism
- Turner – 20% circuit breaker for non-homestead?
- Is 20% taxable value cap for properties $5m or less
- Turner – Is indexed?
- Is indexed to CPI/inflation
- Turner – Any evidence that tax savings will flow down to renters?
- Do not have any data on that, will get with the comptroller
- Turner – This bill does not includes teacher pay/bonuses? Was added in the Senate version
- No, this is a tax bill; is a different subject
- The House is fully behind that policy, but should be dealt with separately
- Turner – We did both of those things in HB 3; hope we can continue having that discussion as this moves to the floor
- Raymond – This is one of the biggest bills we will ever pass; is something a lot of us have wanted to do for a long time
- Raymond – Are so many businesses that cannot keep up with these evaluations; circuit breaker will help them
- Thierry – As property taxes rise, rent rises as well; as property taxes go down, possible rent will go down
Trey Bates, Texas REALTORS – For
- Speaks in support of the bill
Meyer, in closing
- Overall savings to homeowners under this bill is approximately $1.2k and $1.5k
HJR 2 (Metcalf) Proposing a constitutional amendment to authorize the legislature to establish a limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the governing body of certain appraisal entities
- Metcalf – Resolution for HB 2; CADs to not exceed
- Exempts full $18b appropriations from the constitutional spending limit
- This package is larger than some state’s annual budgets
- Shine – Want to ensure this bill takes care of our seniors and those who are disabled
- Is our intent this ensures seniors, and the disabled will receive full benefits
- Shine – All things in the HJR will be under one constitutional amendment?
- Correct
- Raymond – Believe this will be on the ballot on November 7; people need to get out to vote on this; is one of the most historic pieces of legislation
Jennifer Rabb, Texas Taxpayers and Research Association – Neutral
- HB 2 sunsets the circuit breaker pilot in December 2026, but HJR does not have that same expiration date
- Request the HJR is revised to ensure that pilot expires on the same date as the enabling legislation
- $100k homestead exemption, do not oppose the homestead exemption, but will shift property tax burden 3% from homeowners to businesses
- Will use GR that is paid for more primarily by business
- Would like more analysis on this tax shift by the comptroller’s office
- Raymond – Hope some of your assumptions are wrong; position that businesses will not benefit under from this bill?
- Businesses will benefit from a tax cut
- Raymond – Is the legislature’s commitment to fund public education more in this state
- Overall shift of the tax burden will be on businesses
- Raymond – Not sure if I am following your logic, will help businesses, especially
- Thierry and Rabb discuss the analysis done by TTARA
- Button – Ask for an analysis on the impact to small, medium, large businesses; would like a better picture of this
- Will be working to get that analysis together
- Meyer – We can work on that
- Turner – Asks about the circuit breaker pilot program expiration?
- The legislature will have continuing authority to enact a 20% cap
- Would be better to establish this as a pilot program in the constitution
- Turner – Some business appraisals are done based on income methodology; have sense of how this method would work for those?
- 20% goes towards for taxable value of property; will possibly be less incentive to argue about market value; will need to see how this works out in reality
- Shine – Shift in tax resulting from consumers getting an exemption and businesses do not; if it was compression alone, that would not be the case
- Correct; occurring because of the magnitude of the homestead exemption
Metcalf, in closing
- Have not heard the concerns spoken about by the previous testifier
- Is not a cap, is a circuit breaker; is clear in the legislation when the pilot program expires
- Noble – When will property payers see this realized – see this on their bill?
- Tax years 2024, 2025, and 2026
Vote Outs
- HB 2 voted out to the House floor (9-0)
- HB 3 voted out to the House floor (9-0)
- HJR 2 voted out to the House floor (9-0)