Updated at 3:02 p.m.: to clarify that under Senate Committee Substitute for SB 1, it’s a one-year tax cut.
AUSTIN — Echoing a top priority of Lt. Gov. Dan Patrick, Gov. Greg Abbott on Wednesday effectively asked lawmakers to use $2 billion or more of the state’s projected cash balance to provide more cuts in school property taxes.
For the 2022 tax year, the owner of a $300,000 home in Texas — close to the median price — would pay about $200 less in property taxes, under a bill moving rapidly to passage.
Depending on the state economy’s performance, the one-time school property tax cut could be larger.
Abbott also added to the third special session’s agenda submission to voters of a proposed constitutional amendment that would allow more detention of criminal defendants without bail.
Later Wednesday, the Senate, which Patrick leads, promptly passed the tax-cut measure and a constitutional amendment that would let judges deny bail to people accused of violent crimes, first-degree felony sex crimes and human trafficking if releasing them could jeopardize public safety.
“These two additional agenda items are crucial to improving the quality of life for all Texans,” Abbott said in a written statement. “I look forward to working with my partners in the Legislature to pass these additional items that will lower property taxes and keep Texans safe.”
In his message to the House and Senate adding two subjects to a five-item “call” for the session, the Republican governor didn’t specify an amount of property-tax cuts.
Abbott simply said he wants lawmakers to provide “additional property-tax relief for Texans.”
But going into the overtime session, which began Monday, Patrick said his top priority is to create a “quantum shift” in state leaders’ thinking — tax cuts before any new spending.
The state is awash in nearly $16 billion of federal COVID-19 relief money. Divvying up the federal cash is one of Abbott’s original agenda items for the current session. But what Patrick proposes to use to buy down local school property taxes is part of a projected cushion in discretionary state funds for the two-year budget cycle that began earlier this month.
After lawmakers in this year’s second special session spent $1.8 billion more on border security and made some less costly nods at retired teachers, foster children and applicants for homestead exemptions, Comptroller Glenn Hegar said the current cycle should end on Aug. 31, 2023, with $6.02 billion of the state’s discretionary cash unspent.
A week ago, Patrick said in a news release that more school property tax cuts are a must. Using symbolism, he designated the legislation as Senate Bill 1 this session.
“With a state budget surplus expected to be in the billions, taxpayers must come before any new spending,” Patrick said. “Tax relief must come first — before new spending.”
Pressure on Abbott
In next year’s GOP gubernatorial primary, Abbott is being challenged by at least three people who are attacking him from the right — including former Dallas state Sen. Don Huffines. Huffines has called for the complete abolition of property taxes.
Though Huffines has vowed to push for a constitutional amendment that gradually puts “the broken property tax system on a path to zero,” he hasn’t specified what current state functions he’d cut to maintain such a schedule during an economic downturn.
Another Abbott foe, former state GOP chairman Allen West, also has called for the abolition of the property tax. In a campaign video, West has linked property taxes to the teachings of Karl Marx, the founder of communism. Without offering details, West said a “consumption tax” could help finance the proposed major shift in Texas government finance.
On Wednesday, the Senate approved SB 1 by a 30-1 margin. It would devote at least $2 billion of state general revenue, and possibly as much as $4 billion, toward a buy-down of school districts’ “maintenance and operation,” or M&O tax rates, over the next two years.
Next June, Hegar would have to provide an update to his biennial revenue estimate. If Hegar finds continued economic expansion is likely, the 2022 reduction in M&O taxes could be bigger than $200 for a median-price home, said Sen. Paul Bettencourt, a Houston Republican who is SB 1′s author. But the M&O rate would revert to its old level in 2023.
“This is substantial property tax relief,” Bettencourt said.
The state’s discretionary fund cushion may grow, he said. If so, the tax cut for “the average home would go from about $200 to $300” or more, he said.
The cuts are “eye-popping,” said Bettencourt, chairman of the Senate Local Government Committee. The reductions would be noted on people’s property tax bills and “be hard to miss, even by the most skeptical taxpayers, [showing] that we’re doing everything we can to give them a break.”
#SB1 with $2 billion (up to $4 billion) of property tax relief passes Senate Finance 14-0! Reduces median home property tax bills by a minimum of $200 (maximum $400 in 2022) if passed by the #txlege. Lt. Governor @DanPatrick priority! @TPPF & @txtaxpayers testified in favor! pic.twitter.com/WGcU6s67xi
— Team Bettencourt (@TeamBettencourt) September 21, 2021
Under the bill, the first $500 million of any additional surplus projected by Hegar would remain in the general revenue fund. Beyond that, additional dollars would be divided equally between the general revenue fund and additional buy-downs of school levies.
Sen. Juan “Chuy” Hinojosa, D-McAllen, stressed the tax cuts aren’t permanent.
“So we would have some surplus for other needs?” he asked Bettencourt.
Yes, Bettencourt answered.
Casting the only “nay” vote was Austin Democratic Sen. Sarah Eckhardt, who unsuccessfully sought to give high-growth school districts another possible use of the money.
“Would you like to put that savings toward the bond issue to build this new school?” Eckhardt said school trustees should be permitted to ask their voters.
The bill now goes to the House.
“Let’s hope the House moves forward with it,” Patrick said.
Denying bail to more defendants
On restricting bail for criminal defendants, Abbott said the Texas Constitution needs to be changed.
Texas is considered a “cash-bail state.” Currently, the Constitution allows judges to keep only a few categories of defendants, such as capital murder suspects and those accused of a felony while out on bond for another alleged felony, in jail without the option to bail out.
Abbott and many Republican lawmakers have said judges need more leeway to keep dangerous people behind bars before their trials. They have pointed to numerous examples of defendants accused of violent crimes being released on bond and then being charged with new crimes.
The governor and many GOP lawmakers want to submit a constitutional amendment to voters that would let judges deny cash bail or personal bonds, which don’t require cash but can include restrictions like GPS ankle monitoring or routine drug testing, to defendants accused of high-level violent or sexual crimes.
In late August, lawmakers passed a bill that overhauled training of judges in setting bail, required collection of data, and ordered officials to look at a defendant’s criminal history before setting bail.
It also bans the release of those accused of violent crimes on personal bonds. Civil rights advocates have argued the exclusion of cashless bonds will punish poor people, especially Blacks and Hispanics, and lead to overfilled jails.
The bill, which Abbott signed into law last week, is named for slain state trooper Damon Allen. Parts of it take effect on Dec. 2, while other provisions don’t take effect until January.
