Big Jolly Politics

politics in Harris County and Texas

89th Legislative Session: Property Tax Relief

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Property tax relief is lower in the release sequence because it’s such a no brainer.  This has been a flagship issue for Texas Republican leadership, and with a sizable budget surplus, the Legislature is under pressure to deliver meaningful cuts. While there is no reasonable argument against providing some relief, the real questions lie in how to implement it effectively and whether the relief will be sustainable long-term.

The last legislative session saw intense infighting between the Texas House and Senate over how to structure tax relief.  The conflict between Lieutenant Governor Dan Patrick and Speaker Dade Phelan nearly derailed the entire effort, and special sessions were necessary for passage. If Republican leadership repeats last session’s mistakes, it risks turning a clear win into a disruptive, politically damaging battle.

Avoiding Another Legislative Battle

While Texans want lower property taxes, they also want functional governance. Last session, the House-Senate deadlock over tax cuts led to delays and frustration, undermining what should have been a clear conservative victory.

There’s also a fair question about how much this fight spilled over into other legislative battles, particularly the stalemate on school choice and the Paxton-Phelan feud. If Republican leadership wants to maximize conservative wins this session, they need to keep internal disputes behind closed doors and deliver a unified, coherent plan for tax relief that doesn’t devolve into another high-profile standoff.

Is Property Tax Relief the Best Use of the Surplus?

The fundamental question isn’t whether Texans should get property tax relief—it’s how much relief makes sense, and what portion of the surplus should be allocated to it versus other priorities.

In the next post, I will explore alternative ways to use the budget surplus.  But for now, the Legislature must consider:

What is a responsible level of property tax relief? – The surplus is not a recurring revenue stream; any tax cuts must be structured to avoid creating budget shortfalls in future years.

How should relief be distributed? – Prior efforts have included a mix of homestead exemptions, appraisal caps, and rate reductions—which is the most effective long-term strategy?

What should be retained as surplus? – Texas’ rainy day fund exists for a reason. With economic uncertainty on the horizon, does it make sense to spend aggressively, or should a portion of the surplus be retained for stability?  Are other rainy day fund expenditures a better use for part of the surplus?

Conclusion: A Popular Policy That Needs a Smart Approach

There’s no doubt that property tax relief is politically popular, and with a large surplus, it would be politically foolish not to provide some level of tax reduction. However, long-term sustainability, effective implementation, and maintaining fiscal discipline must be part of the conversation.  The legislature needs a measure that is easily messaged and resonates with the population.

Republican leadership must learn from last session’s mistakes and avoid letting political infighting derail an issue that should be an easy win. The question isn’t whether property tax relief should happen, but rather how much is wise, and what other priorities should also be addressed?  As long as the legislation anticipates the opposition’s arguments and has readily available counters that resonate this issue is an easy win.

 

Examining the Property Tax Battle Part 3

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In part two the political history and optics of the situation were examined.  Next is examining how this fight can partially define the party going forward, and the consequences of the fighting, and some final thoughts.

Defining the party

The democrats were going to use the issue to try and inflict harm on the party.  If a plan had passed in the regular session their ability to have an argument take root would have been limited.  Now, with the battle being waged so intensely and publicly the conditions are set for the democrats to use this as a messaging tool to say this is who the party is.  The longer this battle drags on (not counting a pause for the impeachment trial) the more effect the democrat messaging becomes.

The potential messaging is easy to see.  If the House plan passes the democrats will use Lieutenant Governor’s messaging that the House plan favors business and the wealthy over everyday Texans.  This is gift wrapped to stick since it is the same message that is being used now.  They don’t even have to create the argument – they can use the statements and say this is who won the fight for the party and what they represent.

If the Senate plan prevails the attack will be different.  Whatever it may have been; now it will be a version of look how dysfunctional the republicans are.  That message is less effective, but with the great message discipline within the democrat party it will cut through the background noise of the next cycle and be an issue.  I do not think we should let the democrat response dictate which plan passes, but we do need to be aware that the longer and uglier this battle becomes the more the end result defines the party.

Consequences

The time to avoid negative consequences has passed.  What was a great win for the party now will have negative consequences.  The everyday Texan, regardless of political affiliation, likes having more money in their pocket because of political action.  Sure, democrats may argue the money could have been better spent, but in the end that message won’t resonate since it is in the context of people having more money in their pocket.  Property tax relief is a winner.  Now, the damage has been done and the political windfall that comes from passing relief is lessened by how it passed.

Other, more dangerous, consequences are of greater concern.  Infighting creates bad blood.  Look at how well Harris County Republican Party ran with Gary Polland was at the head of the party.  While open infighting isn’t the main reason subsequent chairs haven’t had success; it has made opposition messaging easier and caused bad blood that has hurt the party.  The same will follow on the state level.

Governor Abbott’s vetoes are going to make the problem worse.  Not only have significant intraparty divisions occurred and taken hold, but the vetoes and soliciting pushback against Lieutenant Governor Patrick are going to create bad blood among people who are negatively impacted by the vetoes.  This group is going to remember what happened, and be motivated to do something.  No idea how that something will manifest, but even if it’s just not donating and having a long memory a direct negative effect will follow.  A motivated, unhappy, group of individuals who are already involved in the community in some way is a problem.  It’s one that will have to be resolved, and could make a noticeable difference in the next primary cycle.

One other significant consequence is possible.  Lieutenant Governor Patrick is probably the only person who could mount a significant primary campaign against Governor Abbott.  They are both up for election in 2026, and Lieutenant Governor Patrick has already said he will run for reelection in 2026.  Does this change the office he intends to seek?  If so, this impacts the top two races on the ballot, and creates significant divisions in the party.

Concluding Thoughts

On the merits the Senate plan should prevail.  I own both a home and a business so see both sides of the issue, and side with Lieutenant Governor Patrick on the issue.  While neither plan significantly impacts appraisals, and other legislation is needed to address this aspect, people are being taxed out of their houses.  As a matter of political governance the Senate plan affords some relief to businesses, but helps homeowners the most, which is both a greater good and helps people becoming a political winner.  Also, the dollar amounts saved by homeowners are more likely to be spent as discretionary income creating economic benefits to small businesses, many of which are still hurting from Covid.

Of more concern, though, is the damage that the infighting has caused.  Of all the principles, Lieutenant Governor Patrick has come out the least damaged and holds the moral high ground.  He is trying to help the everyday Texan, and has continued to work to pass legislation in the special session despite the House adjourning sine die after one day. To the extent anyone looks like the adult in the room he does.  He also has a change to seize the narrative by judiciously using the impeachment trial to create a space for everyone to cool down before the tax plan is taken up again.

County parties are going to be hurt by what has happened in Austin.  The county parties need to start making the messaging relatable – reduction rather than compression as an example.  More importantly, they need to take the time to shore up relationships with anyone who is hurt by the infighting and remind them that the county party is not involved in the fighting and relies on continued support.

No one wins here, but hopefully enough damage control can take place to limit the amount of harm that occurs.

Examining the Property Tax Relief Battle Part 1

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The property tax relief battle has been fascinating to watch… in a train wreck you can’t turn away from type of way.  The legislature had a great opportunity to bring relief to Texans and score a great fiscal and public sentiment win for the Republican Party.  The longer, and uglier, the battle has become the more it will come to define the party for the next election cycle.  What follows is a three part series on the issue.  I had been meaning to post as they were written, but Kenshin has been in the hospital 12 days and counting this month leaving time a precious commodity.  So the series will be posted all in one batch.

The Battle Lines

The House and Senate have plans that partially overlap, but also have a significant difference in focus for who will benefit from the plans.  This is set against the backdrop of campaign promises to reduce property taxes.  The short version of the difference between the plans is the House plan is a plan to “compress” (surely the messaging could be better) the amount of property taxes school districts could assess.  The Senate plan has an element of compression, but would also expand the homestead exemption.  Governor Abbott supports the House plan.

The battle lines are reducing taxes for everyone on all property versus a smaller universal reduction and skewing the difference towards homeowners in the Senate plan.  More simply, though not totally accurately, the messaging is relief for homeowners versus business.  The democrats likely will amplify the homeowner versus business theme leaving that the messaging the public remembers next cycle.

This is set against the backdrop of Governor Abbott wanting to completely eliminate property taxes over time, and Lieutenant Governor Patrick believing the complete elimination of property taxes is impossible.  Senator Huffines, when he challenged Governor Abbott in the primary, also wanted to eliminate property taxes, so some work has been done regarding the feasibility of the idea.  However, I’ve never seen anything showing both how this could be accomplished beyond a conceptual mechanism, and how the state will maintain necessary funding levels should the income stream used to reduce the taxation slows.  To that end, until such a time as both ability and contingency aspects can be addressed Lieutenant Governor Patrick’s position is the more realistic approach.

The Regular and Special Session

What came first, the chicken or the egg? The question applies to the dysfunction that emerged in the regular session and has carried over to the special session.    Governor Abbott, at least publicly, stayed out of the difference between the two plans in the regular session.  When it became clear that the two chambers would not be able to reach a compromise significant dysfunction ensued.  No need to rehash what has happened.  Suffice it to say the party is significantly fractured and it appears the divide will continue.

Once the regular session ended, Governor Abbott immediately called a special session, and gave an exceptionally restricted call.  He basically said pass the house plan, and you aren’t allowed to consider the Senate plan.  Speaker Phelan had the House pass their legislation on the first day and then adjourned sine die.  This was a direct challenge to Lieutenant Governor Patrick, and the Senate.  By adjourning sine die the House signaled no negotiation and no compromise.

Obviously, this was not well received across the Capitol hallway, and the Senate did not pass the House bill.  The House’s action seems particularly ill conceived with the Senate having the option of conducting Attorney General Paxton’s impeachment trial at a time of their choosing.  They can choose to effectively delay any subsequent special session by conducting the trial and forcing the House and Governor Abbott to wait.

Meanwhile, Governor Abbott decided to apply maximum pressure to the Senate, at the expense of creating collateral damage.  He engaged on a veto threat campaign   (which has been at least partially carried out) that is vindictive appearing.  Bills were vetoed with the specific language saying they could be reconsidered in a special session once property tax reform has passed.  Additionally, Governor Abbott appears to be soliciting individuals who would benefit from the bills under veto threat to call Lieutenant Governor Paxton and apply pressure.  While Governor Abbott has publically stated he wants the two chambers to work out their differences as the special session progressed this is not possible under the call of the session, and the vetoes and solicitation to apply pressure doesn’t exactly sound like wanting to facilitate a compromise.

Next, a look at the political history that brought us here and the optics of the situation.

Galveston County Tax Assessor Cheryl Johnson says Raise Your Voice!

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cheryl johnson property tax relief

cheryl johnson
Cheryl Johnson

I am increasingly disappointed by government and organization opposition to Senate Bill 2 (Texas Property Tax Reform and Relief Act) filed by Senators Bettencourt, Creighton, Hancock and Taylor (Van).  Disappointment blossomed into outrage upon discovery that my school district is pursuing hiring uncertified teachers and is constructing a new boardroom, my city aims to build dog parks (in a city where the average lot is over half an acre), my county has spent a million dollars on a single lawsuit, and the drainage district isn’t really accomplishing its mission to reduce flooding.

When President Kennedy challenged us to, “…ask not what your country can do for you – ask what you can do for your country…” I do not believe he intended that we provide unbridled access to our bank accounts, yet that is what appears to be occurring at the local level.  The growing government opposition to SB 2 is an example of that with local officials aligning themselves against an effort designed to establish automatic controls over tax increases – necessary because of governmental effort to do all they can – not only what they should.

Property taxes in Texas have been out of control for decades thanks to ever increasing property values.  Many governments held the line on tax increases but have enjoyed the additional income resulting from a growing tax base.  In hearing after hearing across Texas last year, anxious and anguished taxpayers begged the Senate Select Committee on Appraisal Reform to do something.  SB2 was filed in response.

The bone of contention by governments arises from a mandatory limit on revenue to 4{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} above the prior year (plus debt) with an automatic election if revenues increase beyond that limit.  This is necessary, in large part, because of the myriad dates and times local governments meet to discuss taxes and spending.  Citizens do not have time to babysit local government actions thus automatic controls when taxes are involved – a blessing for Texas families.

Personally, I believe 4{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} is a pretty good pay increase, certainly more than most receive.  Add to that the government “savings accounts” – funds held in “reserve” – that often accumulate from underestimation of revenue year-after-year-after-year.  I am thrilled my government is solid because of robust savings but my reserves for three to four months of expenses plus three to four months of debt was drained to create this for them.  While we tightened our belts, government tightened the noose and weighed us down with unreasonable tax burdens.

So, taxpayers unite!  The time has arrived to stand together against out of control government spending.  Local governments will use your money to fight for their right to tax without forced limit and accountability.  It takes minutes a day to communicate online with your legislators (find them at www.capitol.state.tx.us), to post on Facebook, Pinterest or Nextdoor.  Pick up the phone and call your State Rep and Senate office.  Voice your opinion because government special interest will be voicing theirs as tax reform is hotly debated in the Texas Capitol this spring.