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Conflict Over Property Tax Relief Continues at Texas Capitol

The fight over property tax relief continues at the Texas Capitol.

Over the weekend and on Monday, Gov. Greg Abbott and Lt. Gov. Dan Patrick both tweeted several times about the best way to give Texas homeowners a break on their property taxes.

Both want to compress, or lower, the school maintenance and operations tax rate, commonly referred to as “M&O.” M&O taxes pay for the day-to-day operations at Texas public schools.  

Patrick also wants to increase the homestead exemption – the amount of a home’s value that the homeowner doesn’t have to pay taxes on – from $40,000 to $100,000.

While speaking at an event hosted by the conservative think tank Texas Public Police Foundation (TPPF), Abbott endorsed TPPF’s plan to use the budget surplus to reduce M&O taxes until the state eliminates that portion of Texans’ tax bills.

“The plan that’s currently being bandied about right now will actually reduce the maximum compressed rate, which, again, everybody pays – homeowners, renters, businesses. Everybody pays this property tax rate, and it will reduce it from about $0.91 per $100 of value to about $0.65 per $100 of value. That’s about a 30% decrease in the tax rate,” said James Quintero, policy director of the TPPF’s Center for Local Governance. “And so long as the Legislature maintains its commitment to taxpayers, that will be a 30% tax rate reduction in perpetuity.”

Quintero said that when the state doesn’t have a budget surplus, the “Rainy Day Fund” can be used to keep the M&O rate low. Long-term, he said the State can charge sales tax on more items to eliminate the M&O rate.

Patrick is not a fan of the plan. He has said homeowners would save $710 a year with the TPPF’s plan, compared to more than $1,200 a year if lawmakers pass compression and increased exemption plan. He has also stated that eliminating all M&O taxes just isn’t practical.

“Total local M&O taxes projected for the next two years is $55 billion. To end property taxes through compression, we would have to come up with $55 billion. Now, how much is $55 billion? It’s 38.2% of our entire budget. You’d have to cut school funding. You’d have to cut medical funding. You’d have to cut law enforcement. You’d have to cut everything,” Patrick said.

The lieutenant governor hosted a press conference on Tuesday to argue for the Senate’s plan. He said any talk from Gov. Abbott about eliminating property taxes was “fantasy” and he believes the governor got bad information. If Gov. Abbott is sticking to the House plan, Patrick invites him to a debate, he said.

Patrick also called on the House to “come back to work” because the Senate plans to be at the Capitol until Thursday and again next week. He claimed the chambers have to grant each other permission to sine die, and the Senate did not give the House permission, adding if House Speaker Dade Phelan agrees to negotiate, the Senate will adjourn and they can come back for another special session.

The House of Representatives voted last week to put the governor’s plan in place, then adjourned sine die for the special session. But Patrick has said he will not give up on increased homestead exemption.

The Senate is expected to gavel in Tuesday at 6 p.m.

Source: KVUE