Updated property tax reform proposal surfaces in the Texas House

Texas Capitol star

March 26, 2019

In an effort to continue working toward property tax reform, a Texas House chairman tasked with spearheading the issue this legislative session sent colleagues a new draft of his high-priority bill on Tuesday — the day before his committee could vote to advance the proposal.

A draft substitute of House Bill 2, obtained by The Texas Tribune, would still require that local governments hold an election before raising 2.5 percent more property tax revenue than the previous year. But it would add a carry-over provision that lets taxing units bank unused revenue growth for five years, allowing them to exceed the trigger point for an election if they had less than 2.5 percent growth in preceding years.

Small municipalities could also benefit from a “revenue enrichment” measure that would effectively let them raise up to $250,000 in new property taxes a year, even if it exceeded the growth limit. That threshold would be updated by the state comptroller each year.

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A spokesperson for state Rep. Dustin Burrows, R-Lubbock, the author of the measure and chair of the Ways & Means Committee, did not respond to a request for comment. The committee could still amend the draft proposal before it votes the legislation out, which is expected to happen Wednesday morning.

Community colleges, emergency service districts and hospital districts would no longer be subject to some changes proposed in the legislation. Language related to school districts also appears to be removed from the new version of the proposal, which is expected to work in conjunction with the House’s school finance reform package. Taxes raised on new developments would remain excluded from the 2.5 percent trigger.

If the Ways & Means Committee approves the bill, it will head to the committee that sets the House calendar. Some have suggested the whole chamber could vote on the bill sometime in mid-April.

GOP state leaders pushed for that 2.5 figure at a January news conference, though that proposal, which was filed soon after and faced pushback from Democrats, has stalled in both the House and Senate in recent weeks.

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The figure is a vast departure from numbers the two chambers debated — and ultimately gridlocked over — when the Legislature last met in 2017. The House, under different leadership, championed a proposal for 6 percent, while the Senate pushed for one at 4 percent. Since January, when the consensus proposals were first unveiled, the same state leaders who championed the legislation have positioned 2.5 as a conversation starter.

“This is a starting point for the bill,” Burrows told Lubbock radio host Chad Hasty after he filed the bill. “Ask me again in 60 days, and we’ll see where the bill is at.”

Other key players in the property tax debate, including Lt. Gov. Dan Patrick, the Republican leader of the Senate, and state Sen. Paul Bettencourt, a Houston Republican who’s spearheading the measure in the upper chamber, have suggested that the landing point for a final bill could be anywhere between 2.5 percent and 4 percent.

The Senate’s measure has not yet hit the floor. It was quickly pushed through the chamber’s Property Tax Committee in February, with a modification allowing voters in small taxing units to opt in to parts of the reforms. As first drafted, cities, counties and special taxing districts — like those for community colleges and certain hospitals — were exempted if their sales and property tax levies did not top $15 million.

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The draft version in the House committee offers a different approach. The “revenue enrichment” provision allows for a “sliding scale small district adjustment,” said Dick Lavine, an analyst at the liberal-leaning Center for Public Policy Priorities who has reviewed its language.

“If your total revenue is under around $3 million, you’re subject only to the current 8 percent rollback rate,” he said. “Above $10 million, you’d be subject to the proposed 2.5 percent rollback rate. If you’re between those two numbers, it’s a sliding scale.”

The House Ways & Means Committee is set to meet at 8 a.m. Wednesday. Seven Republicans, including Burrows, and four Democrats serve as members on the committee.

Disclosure: The Center for Public Policy Priorities has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

“Updated property tax reform proposal surfaces in the Texas House” was first published at by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.