House Property Tax Bill — HB 2

March 29, 2019

Legislative News

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House Ways and Means Chairman Dustin Burrows (R-Lubbock) introduced a committee substitute for HB 2, the House’s property tax bill. The committee met just after midnight on Mar. 27 and voted out the bill on an 8-3 vote.

The substitute still contains a property tax cap of 2.5 percent for cities and counties but added some new features. Community colleges, emergency services districts, and hospital districts would no longer be subject to the property tax revenue cap. School districts are also removed from the 2.5 percent cap and would be governed by the provisions outlined in HB 3, the House’s school finance bill.

Taxing entities could also receive a “revenue enrichment” measure that would permit a qualifying taxing entity to raise up to an additional $250,000 in tax revenue. Chairman Burrows indicated the revenue enrichment was an attempt to potentially offset the costs if an entity chose to have an election to exceed the 2.5 percent cap.

For taxing units that don’t exceed the 2.5 percent cap, there is a carry-over provision. The term used in the bill is “unused increment rate” which allows a taxing entity to bank any difference between the adopted rate and the 2.5 percent cap for five years. The taxing entity is permitted to then exceed the 2.5 percent property tax revenue cap, in proportion to the unused increment rate, without holding an election.

Rep. Eddie Rodriguez (D-Austin) and Rep. Trey Martinez-Fisher (D-San Antonio) each offered two amendments that would exempt some of the costs counties incur from the proposed property tax cap of 2.5 percent. All four amendments failed on a vote of 7-4.

Last Session, the House proposed a 6 percent cap where the Senate supported a 4 percent cap, but the issue was left unresolved as the two chambers were unwilling to compromise. Lt. Gov. Patrick has hinted that if the legislature isn’t able to achieve a significant cut in property tax growth, he is prepared to achieve significant property tax relief in a special session.

HB 2 will now be sent to House Calendars Committee which will determine when the bill will be heard on the House floor. SB 2 is out of committee but remains stalled on the Senate Floor.