Texas House passes Texas Property Tax Relief Act
Rep. Metcalf presents House Bill 2987 to the House Ways and Means committee on April 24.
April 24, 2023 | Austin, TX
An update from Representative Will Metcalf (HD 16)
It is the time of year once again when everyone receives their annual property valuation letter in the mail from the Montgomery County Central Appraisal District. It is also the time of year that my office receives countless phone calls, emails and letters from frustrated property owners about the outrageous jump in their property value in just one single year.
As you know, your property valuation is only one side of the equation that determines what your tax bill will come out to be in the fall. There is an estimate on your appraisal notice that tells you what your property tax bill may be, but that amount is only determined once all the local taxing entities such as your local school district, county, and city, set their rates later this year.
If you recall, the Texas Legislature has spent quite a bit of time working on the property tax rate reform side of this equation over the last several sessions. In 2019 the legislature championed massive property tax reforms under House Bill 3 and Senate Bill 2, two bills I was proud to co-author and co-sponsor.
Both HB 3 and SB 2 significantly constrained the ability of taxing units to raise property taxes above a certain amount before voters must approve. Without the reforms made in HB 3, tax rates would have continued to rise much higher and more quickly than before these changes were implemented. SB 2 resulted in city, county and special district tax rates limiting their levy growth.
However, the policies we have addressed in recent sessions only tackle one side of the property tax bill equation by targeting reform in the taxing entities rate setting process. The other side of the equation consists of skyrocketing property valuations assessed by central appraisal districts which are then used by local taxing entities to set local property tax rates.
The state does not collect a property tax, nor does it collect local dollars from your property taxes as revenues to fund the state budget. The state budget is funded by different sources, such as sales tax (the largest revenue stream), rental tax, oil and gas tax, and so on. Local governments and taxing entities are funded by your local property tax dollars, and you can see on your tax bill each fall the breakdown of exactly which taxing entity receives what amount and the rate they charge.
The problems we are seeing with massive appraisal increases are driven by market demand. These rising appraisals have remained a crushing burden on home and business owners.
I have fought every session that I have served in the Legislature to reign in appraisal districts, and I am proud to report that after last year’s statewide sticker shock from appraisals, the Texas House has passed sweeping appraisal reform for the first time in decades. As your State Representative, this is an issue I have always advocated to address for multiple sessions.
The Texas House has made this issue a top priority this session by filing House Bill 2, the Property Tax Relief Act, and House Joint Resolution 1 to provide meaningful tax relief and put additional safeguards in place to combat rising property values. HB 2 and HJR 1, which I am proud to co-author, lower the appraisal limit to 5% for ALL properties in Texas. This not only cuts in half the current 10% appraisal cap for homestead owners but extends the cap to ALL property.
Notably, HB 2 also includes a 5% cap on all commercial property which currently has no appraisal cap. This will help continue to promote economic growth and provide stability and predictability for all property owners. HB 2 provides an additional $12 billion in tax relief by further compressing school district tax rates by $0.15.
Coupled with our base budget, House Bill 1, this will provide over $17 billion in total property tax relief, the largest reduction in state history, by lowering school property taxes 28%. House Bill 2 also reduces the number of school districts subject to recapture, shrinking total recapture payments by $4.5 billion for the 2024-25 biennium.
Our goal is to not only provide this immediate tax relief to all property owners but also to protect both homeowners and businesses from that too-often shock of skyrocketing property values. HB 2 would also require tax assessors to provide escrow accounts at the request of property owners to better help them plan and save for their property tax bill.
Lastly, HJR 1 will allow Texas voters to decide on whether to enact the appraisal cap measures in HB 2 as well as ensure any future property tax relief appropriations can be sent to taxpayers without being subject to the constitutionally set spending limit.
This is a great piece of comprehensive legislation aimed at addressing the appraisal side of your tax bill and I cannot express how pleased I am that the Texas House has taken this step in the right direction to protect ALL property owners in the state. HB 2 ultimately passed the House floor 139-5 and is now waiting in the Texas Senate.
We must get this legislation on Governor Abbott’s desk for his signature. We must address property tax relief by addressing the appraisal side of the property tax equation which is the way to make a significant and meaningful difference for Texas property owners for years to come.
Unfortunately, the House’s legislation has faced major pushback from special interest groups and those in the business of protesting property tax appraisals who stand to lose quite a bit of business should HB 2 and HJR 1 become law. These entities have a vested interest in the runaway appraisals we have seen for nearly a decade but this is the right thing to do for Texans who have deserved much-needed appraisal reform for far too long.
It is my sincere hope that the Texas Senate will consider and pass this legislation to provide property owners with much needed relief from these skyrocketing appraisals.
As always, it is an honor to serve you at your State Capitol. I look forward to being back in the district in just a few weeks time.
It is an honor to serve our community here at the state capitol.
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May God bless you, your family, and the Great State of Texas!