Temporary property tax relief bill passed by Senate Finance Committee
The Senate Finance Committee conducted a hearing on recently filed Senate Bill 1 today. This bill is identical to SB 91 from the second special session.

SB 1 would provide additional property tax rate compression on a temporary basis (only for school year 2022-23). Rates would be compressed by approximately an additional 6 cents, to then return to the compression schedule under HB 3 (86-R) in school year 2023-24. The exact amount of property tax compression would be the lesser of $4 billion or $2 billion plus surplus funds identified by the Comptroller.

The Texas School Coalition provided testimony on this legislation, expressing support for sustainable property tax relief and concern over the temporary nature of this particular measure. We suggested transparency for taxpayers, to ensure they are aware that the reduction is temporary and that rates will return to their higher level after the one year of relief.

The hearing itself included some insightful conversations among the members of the committee. Themes of that conversation included:

  • Senator Bettencourt (and others) expressed a desire to return any surplus funds the state may have (due to an abundance of federal funds or any other reason) to the taxpayers.
  • Senator Hancock said when 2006 tax relief was given, school districts jumped at the chance to increase I&S rates and essentially erase the effect of the tax relief.
  • Senators Nichols, Perry, and Schwertner expressed concern that if tax relief is given, that school districts will jump at the opportunity to sell bonds to voters at the same time and run up debt rates again. They suggested limits on school district I&S rates to prevent this action and control district debt.
  • Senators West, Bettencourt, and Taylor pointed out that the prohibition of tax rate swaps in HB 1525 (87R) already prevent/limit this practice. Bettencourt said language is currently in the works to be added to this bill to address some limits on bond elections for districts, but no further details were provided.
  • Senator Kolkhorst reminded senators that ESSER funds brought billions into districts and that they should not require additional debt at this time. Senator Taylor reminded the committee that ESSER dollars are temporary and intended to address learning loss.

Testimony from the Texas Taxpayers and Research Association (TTARA) echoed that offered by the Coalition, in that sustainable tax relief if preferred, even if that means the tax relief is slightly less than what is currently proposed.

The Committee voted 14-0 in favor of SB 1 and send it to the full Senate, with the stipulation that it will not be considered by the full Senate without some language to place some limits on school district bond elections in 2022.
Contact your Senator
An amendment will be proposed to SB 1 that will limit school districts' ability to conduct a bond election in 2022 (May and November). It is unclear whether limitations could expand beyond that if tax relief is extended as well.

Senators need to hear from districts about the variety of reasons districts may need to have a bond election--that have nothing to do with capitalizing on the opportunity to propose an increased tax rate at the same time the state has offered tax relief. If your district has had, or might need to consider, a bond election due to enrollment growth, response to a disaster, or even standard (or deferred) maintenance on your facilities as part of a long range plan, please be in touch with your elected representative in the Texas Senate to share that perspective.

Bond elections are already quite limited under current law, and all bonds must be approved by voters--the very people who will pay the taxes.

Update In-Between Special Sessions
We may not be in-between special sessions any longer (and obviously some things have quickly changed...), but in case you missed the update provided last week, you are welcome to watch the video of it, download a PDF of the Presentation, or download the presentation slides for use in your community.

We will have another update this fall, to be scheduled once we have a better idea of when the third special session may conclude.
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