AUSTIN (Nexstar) — The end of an impasse between the state’s top Republican leaders on a property tax deal followed months of party in-fighting and stubbornness on which chamber had a better proposal, and Texas House Speaker Dade Phelan says it was the realization that there was truly no end in sight that finally brought him and the Lieutenant Governor to come together and compromise.
The $18 billion dollar deal came on Monday after about 10 days of negotiations between Phelan and Lt. Governor Dan Patrick, as well as respective chamber stakeholders Rep. Will Metcalf, R-Conroe and Sen. Paul Bettencourt, R-Houston.
It was a long-drawn-out fight puzzling bystanders – after all, Republicans have complete dominance in control of the state and most had promised voters on the campaign trail that reining in skyrocketing property taxes was their top priority going into the session.
In a one-on-one interview with Nexstar, Phelan said the private negotiations came down to recognizing it would be a give and take — with the clock adding to the pressure, as their proposal would amend the Texas Constitution, so voters must approve it in November.
Watch the full interview with Speaker Phelan
“[The] Governor, Lieutenant Governor and I, we just had some very frank discussions about ‘let’s figure out how to land this plane,’” he said. “Taxpayers are anxious…they want to rebate, they want their money back.”
While the House had drawn its line in the sand over appraisal caps while the Senate was insistent on raising the homestead exemption as the best form of relief for Texans. Phelan ultimately got a limited version of what he wanted to see on appraisal caps, while Patrick got exactly what he wanted in the homestead exemption.
“I knew this would be something that would take us to the very end of session. And of course, it took two specials to get there. But we have a better package now, we really do,” he said. “We were able to get some appraisal reforms in this package I think are meaningful. And I’m, we have a pilot program now that in 2027, we’ll come back and revisit, I think it will be very popular.”
What’s in the deal?
Over $12 billion will be spent on reducing the school property tax rate for all homeowners and business properties, known as rate compression. The state will use that money to pay for a greater majority of school districts’ budgets, so they in turn can lower local property tax rates.
Every homeowner who homesteads their home (about 5.7 million homeowners) will get a $100,000 homestead exemption – the amount of a home’s value that taxpayers can write off from their tax bill.
Non-homesteaded properties, valued at $5 million and under, including residential and commercial properties, will receive a 20% circuit breaker on appraised values as a three-year pilot project.
The legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards.
Lawmakers ultimately got near-unanimous support on the property tax package, with the legislation now off to the governor’s desk. But it wasn’t without a final fight; in a last-ditch effort to provide relief for renters, teacher pay raises and more money toward public education, House Democrats tried and failed to amend the final package on Thursday.
Republicans have argued that an overall decrease in tax rates will force landlords to pass the savings on to renters through market forces. Phelan calls it a “market-driven solution.”
“Anytime you drop the cost of doing business, there’s actually an influx of activity in that market,” he said. “You’re gonna see more investments in the market, because the key driver of developments for multifamily housing is taxes. It’s just one of those costs of doing business.”
AUSTIN (Nexstar) — The end of an impasse between the state’s top Republican leaders on a property tax deal followed months of party in-fighting and stubbornness on which chamber had a better proposal, and Texas House Speaker Dade Phelan says it was the realization that there was truly no end in sight that finally brought him and the Lieutenant Governor to come together and compromise.
The $18 billion dollar deal came on Monday after about 10 days of negotiations between Phelan and Lt. Governor Dan Patrick, as well as respective chamber stakeholders Rep. Will Metcalf, R-Conroe and Sen. Paul Bettencourt, R-Houston.
It was a long-drawn-out fight puzzling bystanders – after all, Republicans have complete dominance in control of the state and most had promised voters on the campaign trail that reining in skyrocketing property taxes was their top priority going into the session.
In a one-on-one interview with Nexstar, Phelan said the private negotiations came down to recognizing it would be a give and take — with the clock adding to the pressure, as their proposal would amend the Texas Constitution, so voters must approve it in November.
Watch the full interview with Speaker Phelan
“[The] Governor, Lieutenant Governor and I, we just had some very frank discussions about ‘let’s figure out how to land this plane,’” he said. “Taxpayers are anxious…they want to rebate, they want their money back.”
While the House had drawn its line in the sand over appraisal caps while the Senate was insistent on raising the homestead exemption as the best form of relief for Texans. Phelan ultimately got a limited version of what he wanted to see on appraisal caps, while Patrick got exactly what he wanted in the homestead exemption.
“I knew this would be something that would take us to the very end of session. And of course, it took two specials to get there. But we have a better package now, we really do,” he said. “We were able to get some appraisal reforms in this package I think are meaningful. And I’m, we have a pilot program now that in 2027, we’ll come back and revisit, I think it will be very popular.”
What’s in the deal?
Over $12 billion will be spent on reducing the school property tax rate for all homeowners and business properties, known as rate compression. The state will use that money to pay for a greater majority of school districts’ budgets, so they in turn can lower local property tax rates.
Every homeowner who homesteads their home (about 5.7 million homeowners) will get a $100,000 homestead exemption – the amount of a home’s value that taxpayers can write off from their tax bill.
Non-homesteaded properties, valued at $5 million and under, including residential and commercial properties, will receive a 20% circuit breaker on appraised values as a three-year pilot project.
The legislation will also include savings on the franchise tax for small businesses and create newly elected positions on local appraisal boards.
Lawmakers ultimately got near-unanimous support on the property tax package, with the legislation now off to the governor’s desk. But it wasn’t without a final fight; in a last-ditch effort to provide relief for renters, teacher pay raises and more money toward public education, House Democrats tried and failed to amend the final package on Thursday.
Republicans have argued that an overall decrease in tax rates will force landlords to pass the savings on to renters through market forces. Phelan calls it a “market-driven solution.”
“Anytime you drop the cost of doing business, there’s actually an influx of activity in that market,” he said. “You’re gonna see more investments in the market, because the key driver of developments for multifamily housing is taxes. It’s just one of those costs of doing business.”