House Speaker Dade Phelan has said tightening the appraisal cap is the best way to cut property taxes, but Senate tax-cut proponents, housing experts and business groups predict the move would have dire consequences.
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Cutting the state’s high property tax burden has been a top priority for Texas Republicans this legislative session. HB 2 is a key part of the House’s $17 billion proposed package for how the Legislature should go about doing it. Phelan and Meyer argue lowering the cap is meant to ease property owners’ concerns over eye-popping property appraisal increases in recent years — a symptom of rapid economic growth and the state’s red-hot pandemic-era housing market, which is cooling.
But tightening the appraisal cap would lead to major inequities among property owners and drive up housing costs, experts warn. Those were the effects in California in the decades following a landmark vote in the late 1970s that capped how much homes could be taxed."You cannot compare California's tax structure to the state of Texas' tax structure," Phelan told reporters after the vote."It is apples and bowling balls.
The Texas Senate has a different proposal. Senators want to raise the state’s homestead exemption — the amount of a home’s value that can’t be taxed by school districts — from $40,000 to $70,000; give an additional $20,000 bump to seniors; and give tax credits to businesses. Those ideas are part of the Senate’s $16.5 billion property tax package, whichSome House Democrats on Thursday also took a failed run at HB 2, trying to give homeowners more relief.
But Phelan signaled Thursday he was still open to raising the homestead exemption. A similar proposal cleared the House two years ago.
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