Trump weighs in on fight over Texas property tax appraisal reform

The festering feud over property tax appraisal reform within the Texas Legislature received the input of former President Donald Trump this weekend, siding with Lt. Gov. Dan Patrick.

On Sunday, Trump posted on his Truth Social website that the Senate’s plan should be adopted, and not the House’s.

In calling on the lower chamber’s members to approve the Senate’s plan, Trump deployed Patrick’s newly minted moniker for his counterpart in the House: “California Dade.”

Patrick rolled out the nickname in a television interview with Spectrum News 1 two weeks ago and has deployed it frequently since. It drew a response from Speaker Dade Phelan (R-Beaumont) and then a response to the response from Patrick.

Patrick reacted to Trump’s comment on Monday, saying, “President Trump joins realtors & business leaders agreeing SB 3, by Sen. Paul Bettencourt, cuts billions more for homeowners than the House’s 5 percent appraisal cap plan that will destroy the real estate market.”

This isn’t the first time that Trump — who’s got a close relationship with Patrick, the previous and current chair of his Texas campaign — has criticized Phelan. After the Legislature’s 2021 election reform bill was amended in the House to reduce the penalty for illegal voting from a felony to a misdemeanor, Trump tried to put the screws on Phelan to change it back.

He even threatened to back a primary challenge against Phelan — a threat that did not materialize, as Phelan had neither a primary nor a general election challenger.

The two chambers have been locked in a stalemate on the issue; both have passed their own plans and sent them across the Capitol rotunda, but neither has moved in their opposing chamber.

The Senate’s plan — encompassed by Senate Bills (SB) 3, 4, and 5 — provides for $11.5 billion in new and continued school district rate compression, but also focuses on exemptions. The standard homestead exemption would increase to $70,000 and the elderly and disabled exemption to $30,000. On the business side, the Senate’s plan would create a $1.05 billion inventory tax credit and raise the tangible personal property tax exemption from $2,500 to $25,000.

In total, its plan amounts to $16.5 billion.

The House’s plan — consolidated into House Bill (HB) 2 — provides for $12 billion in new rate compression on top of $5.3 billion in its draft budget for continuing past compression. But the point of contention from the upper chamber is its appraisal cap reduction and extension.

Under the House’s plan, the current 10 percent year-to-year cap on increases to a homestead’s taxable value would be halved; that new 5 percent cap would then be extended to all properties, including businesses. The taxable value would reset to the market value upon the property’s purchase by a new owner.

The two plans are largely similar in their approaches to compression — though the House’s total compression fiscal note is $5.5 billion more than the Senate’s — but the sticking point is the very different strategies for appraisal reform.

Patrick has said the House’s plan is dead on arrival in his chamber, claiming it would wreak havoc on the state’s economy, specifically its housing market, by increasingly untying properties’ taxable value from their market value. To illustrate this, he has pointed to California, which has had a 2 percent cap since 1978.

The counterexample that House leadership has provided is Florida, which has a 3 percent cap on homesteads and a 10 percent cap on all other property.

While both examples have seen wildly different effects, they also differ from the Texas House’s blueprint.

Last week, the House’s plan gained an unexpected backer in former state Sen. Don Huffines — the third-place finisher in the 2022 GOP gubernatorial primary — who wrote in the Houston Chronicle, “The House plan, for its part, at least has the virtue of putting a 5 percent cap on appraisal increases for all properties. This policy applies to all taxpayers, including homeowners, businesses and renters.”

“For the moment, the House’s approach to property tax relief is the best way forward this legislative session. But it’s not the best approach, nor are the Senate or House plans economically feasible in the long run,” he added, gesturing toward a plan to buy down the school district Maintenance & Operations rate to elimination.

The Senate’s slate of bills has been referred to the House Ways & Means Committee – chaired by Rep. Morgan Meyer (R-Dallas), author of HB 2 — but hasn’t been given a hearing. The House’s plan hasn’t yet been referred to a committee.

Only five House members voted against HB 2, and the Senate’s plan passed the upper chamber unanimously. Trump’s call to action means a national voice is now involved in the state’s dispute over a lesser portion of the overall plan for property tax reform this session.
Dan Butcher

Dan Butcher is the editor and publisher of High Plains Pundit. Dan is also the host of the popular High Plains Pundit Podcast.

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