Around the Texas Capitol: Long hours and property tax debate with six weeks to go

Around the Texas Capitol: Long hours and property tax debate with six weeks to go

By Shayne Woodard, J Pete Laney and Lauren Spreen
TAD Governmental Affairs

With less than six before the Texas Legislature adjourns, the House and Senate are getting down to the details of bills to address two of the biggest priorities of the legislative session – property tax reform and school finance reform.

On Monday, after three hours of debate and consideration of 25 amendments, Senate Bill 2 (property tax reform) passed the Texas Senate on a vote of 18-12 largely along party lines, with Sen. Eddie Lucio present but not voting.

The Senate adopted a revised SB 2, which will require cities, counties and other taxing entities get voter approval on a tax rate that raises 3.5% more property tax revenue than the previous year — this was an increase from the 2.5% voter approval threshold included in the original bill, which cities and counties protested was too constraining. School districts would still face the 2.5% threshold. Small taxing units, with sales and property tax collections under $15 million annually, will continue to need to get voter approval on any tax rate that raises 8% or more property tax revenue than the previous year (current law).

The Senate’s consideration of SB 2 caused the House to postpone – for the second time – consideration of its property tax reform bill, House Bill 2. The bill is now set for debate on Wednesday, April 24. It is anticipated that the House will take up the version of property tax reform passed by the Senate (SB 2) instead of its own bill.

In other tax news, on Wednesday, April 10, Gov. Greg Abbott, Lt. Gov. Dan Patrick and Speaker Dennis Bonnen made a surprise proposal – increase the state sales tax by a penny to offset property tax relief, contingent on the passage of HB 2 or SB 2. “If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term” the three leaders said in a joint statement.

A one cent increase would raise the state portion of the sales tax to 7.25%, which would tie Texas with California for the highest in the nation. When combined with additional local-option sales taxes, the sales tax rate would be 9.25% in most of the state. Now the question is whether this plan – estimated to generate an additional $5 billion a year – can gain legislative support.

Also, on Tuesday, April 9, the Senate unanimously passed HB 1 by Rep. John Zerwas (R-Richmond) and Sen. Jane Nelson (R-Flower Mound), the general appropriations bill (state budget). The House refused to agree to amendments added by the Senate, so a conference committee of members of both chambers will attempt to iron out differences on a version that both the House and Senate will need to pass before it can be sent to the governor to be signed into law.

A state budget is the only bill that constitutionally must be passed each legislative session.

Agriculture bills of note, status as of April 16:

HB 503 by Rep. Dan Flynn (R-Van) and SB 80 by Sen. Bob Hall (R-Edgewood) – Expand the sale of unpasteurized (raw) milk. Pending in committees.

HB 13 and HJR 4 by Rep. Dade Phelan (R-Nederland) – Proposes a constitutional amendment to establish the Flood Infrastructure Fund to assist in the financing of drainage, flood mitigation and flood control projects. Passed the House, awaiting referral to a Senate committee.

HB 191 by Phil Stephenson (D-Wharton) – Requires the Texas Department of Agriculture to organize statewide pesticide disposal. Pending before the House.

HB 410 by Rep. James White (R-Hillister) – Expands the definition of a low-volume livestock processing establishment. Passed the House, awaiting referral to a Senate committee.

HB 1188 by Rep. Cole Hefner (R-Mount Pleasant) – Clarifies that land remains eligible for agricultural use valuation after a change in ownership if the transfer of land is to a person who is related to the former owner within the second degree of affinity or third degree by consanguinity. Passed the House, pending in a Senate committee.

HB 3348 by Ryan Guillen (D-Rio Grande City) – Maintains agriculture tax rates on land under tick quarantine. Passed the House, pending in a Senate committee.

SB 1214 by Sen. Charles Schwertner (R-Georgetown) – Expand the sales tax exemption for agricultural-use aircraft to include any other use necessary to operate a business that performs an agriculture service such as crop dusting, predator control, and animal health inspection. Passed the Senate, pending in House committee.