The Texas Senate on Wednesday, the first day of the Legislature's second special session, advanced a tax relief proposal that includes an increase to the homestead exemption and also incorporated teacher pay raises into its bill.
The House and Senate have for months been at odds over how to deliver billions in property tax relief, with the upper chamber pushing for increases to the homestead exemption and the lower chamber advocating to reduce the cap on annual property appraisal increases. With lawmakers at an impasse during the regular session, Gov. Greg Abbott called a special session in May to hammer out a tax relief proposal. That session ended Tuesday without an agreed proposal, and Abbott called a second special session, forcing lawmakers to again come to the table for negotiations.
An amendment to Senate Bill 1, the upper chamber's tax relief plan — which compresses the school district property tax rate and increases the state's homestead exemption to $100,000 — would give a $2,000 pay increase to teachers in urban districts and a $6,000 increase to teachers in rural areas over the next two years.
The teacher pay raise proposal by Sen. Roland Gutierrez, D-San Antonio, was essentially written on the fly at Lt. Gov. Dan Patrick's desk at the head of the chamber. Those discussions were held out of earshot from reporters in the gallery and the conversation was not picked up by the Senate's livestream audio.
All 31 senators supported the measure after more than an hour of lengthy discussion about the amendment that is expected to add $3.2 billion to the Senate's $18 billion property tax relief proposal.
"I want everybody in Texas to know that we all sat up at the front with the (Patrick's) leadership and we did this," Gutierrez said before the measure was unanimously approved. "It took us an hour and a half, two hours. But we worked out all those differences."
As he laid out the amendment, Gutierrez pushed back on concerns that the legislation would not be germane to Abbott's special session proclamation, arguing that the governor has the constitutional authority to specify what issues will be laid out in a special session but not tell lawmakers what to do.
"It is not the executive's position to legislate, that is our role, our pride and our job," Gutierrez said.
Abbott's call for a second special session directs lawmakers to come to an agreement to cut property taxes and set the state on a path to eliminate property taxes altogether.
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Patrick, who has already publicly rejected the idea of eliminating the property tax, thanked senators for working to add the teacher pay raise and for again passing the homestead exemption — his marquee policy issue during the regular session that ended May 29.
Despite the unity in the Senate, an agreement on property taxes between both chambers remains unclear as does how the House will respond to the senators move to throw in a pay raise for educators in the contentious property tax plan.
However, Patrick said he reached out to House Speaker Dade Phelan, R-Beaumont, on Tuesday night, to say it's important that both sides get together to talk things out in person.
"I sent him a text and said the best way to resolve this is face-to-face because there are a lot of well-intentioned people representing a lot of different plans, and the best is to sit down and meet face-to-face," Patrick said. "They have responded, we're looking forward to a meeting. ... Whenever that is, I believe we can get this resolved quickly."
On the House side, Phelan gaveled the members to order Wednesday morning and swore in Fanny Jetton, the wife of state Rep. Jacey Jeton, R-Katy, to act as a temporary member while her husband is deployed to active duty with the National Guard.
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The House then adjourned until Friday, when it is expected to meet briefly before picking back up Wednesday.
The House Ways and Means Committee convened for a brief meeting Wednesday where members unanimously approved the same property tax package the House passed during the first special session that focused on tax rate compression.
Patrick has said the Senate would reject the House's measure.
Reporters approached House Ways and Means Chairman Rep. Morgan Meyer, R-Dallas, to ask if he saw a path to compromise with the Senate, but he declined to answer questions.
In the first special session, Abbott asked lawmakers to pass property tax relief by focusing solely on driving down school property tax rates. The House quickly passed a plan that dedicated all $17.6 billion set aside in the state's fiscal 2024-25 budget to deliver property tax relief through tax compression.
The Senate kept pushing the homestead exemption and the chambers did not reach a deal.
Standing by his proposal, Sen. Paul Bettencourt, R-Houston, the Senate's lead on property taxes, said the combination of rate compression tied with an increased home exemption is something both chambers should appreciate and that will have real impacts for Texans.
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"That is the most powerful thing you can do as a tax writer, keep people from paying," Bettencourt said before both his bill and joint resolution advanced to the House." I hope at this point that this one gets unanimous support here in the Senate and I hope in the House as well."
Voters would need to approve an amendment to the state's constitution to allow for the homestead exemption and connected teacher pay raise in November.
On Tuesday, when Abbott called a second special session, he said lawmakers will keep returning to the Capitol until there is a property tax relief plan both chambers pass and advance to his desk.
"Unless and until the House and Senate agree on a different proposal to provide property tax cuts, I will continue to call for lasting property tax cuts through rate reductions and working toward eliminating the school property tax in Texas," Abbott said in the statement. "Special sessions will continue to focus on only property tax cuts until property tax cut legislation reaches my desk."
Reporter John Moritz contributed to this report.
