Texas House, Senate deadlocked on property tax as 30-day legislative special session ends

Tuesday, June 27, 2023
Lt Gov. challenges Gov. Abbott to debate on property tax reform
Leaders in the Texas House and Senate promised property tax relief, but it has not happened yet.

AUSTIN, Texas -- The first 30-day special session of 2023 ended quietly Tuesday with no laws made and the Texas House and Senate still deadlocked on the best approach to property tax cuts.

Gov. Greg Abbott quickly called a second special session focused solely on property taxes.

Abbott said the second round would begin at 3 p.m. Tuesday - and he held firm on asking lawmakers to provide relief through a method known as compression, or sending state funds to school district to help them lower their property tax rates.

RELATED: Texas Legislature 2023: What survived and failed as session wraps up

"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 a statement.

His agenda for the second special session did not include the increased human-smuggling penalties that he placed on the first special-session call. Lawmakers also could not agree on that item.

Abbott said special sessions will "continue to focus on only property tax cuts until property tax cut legislation reaches my desk."

The Legislature's first overtime session jumped to a quick start on day one, when House members quickly approved their versions of property tax cuts and enhanced smuggling penalties and left town, telling senators to take it or leave it.

Senators left it, passing several versions of a property tax plan in hopes of enticing the House back to the Capitol, or at least getting Abbott to relent on his opposition to the Senate's tax-cut priorities.

It didn't work, and the special session came to an anticlimactic end Tuesday when the Senate met for about one minute before adjourning sine die with most senators absent.

Anticipating a quick response from Abbott, Speaker Dade Phelan said the House plans to convene at 11 a.m. Wednesday, adding, "We will provide additional scheduling updates as they become available."

Abbott was so invested in property tax relief that he guaranteed a special session if the House and Senate couldn't come to an agreement during the regular session. Mere hours after lawmakers wrapped up their biennial meeting in late May, Abbott called them back for a special session, directing them to focus on property tax cuts and harsher penalties for human smuggling.

On property taxes, Abbott threw an added wrench in the process by limiting the discussion to sending state funds to school districts to help lower their property tax rates, a strategy known as "compression."

On the first day of the special session, the House quickly passed a version of Abbott's tax compression proposal and his preferred border security bill, then abruptly adjourned for the special session. The move was a shot across the Senate's bow and a signal that the impasse between the two Republican-dominated chambers was likely to continue.

Abbott, who had avoided taking sides during the regular session, applauded the House's move.

"It provides more cuts to property tax rates than any other proposal at this time," he said in a statement. "It is supported by the most respected tax think tank in the state, as well as more than 30 homeowner, consumer, and business groups across the state. I look forward to signing it when it reaches my desk. "

But the bill got nowhere near his desk. The Senate, led by Lt. Gov. Dan Patrick and state Sen. Paul Bettencourt, R-Houston, pursued a plan that would raise the homestead exemption - directing a portion of the tax cuts to homeowners - and ignited a public intraparty fight rarely seen in Texas politics.

Patrick, whose election to the Senate in 2007 was fueled by his attacks on property taxes, accused Abbott of siding against homeowners in favor of corporations.

"Governor Abbott has finally shown his cards," he said in a statement. "This is not what homeowners expected when they voted for him."

Patrick also attacked Phelan, saying he ran a "dysfunctional chamber" and accusing him of trying to benefit from the House's property tax plan. Phelan is a real estate broker and partner in a real estate investment firm.

Arguing that Abbott's authority to set a special session's agenda did not include the power to determine the content of legislation, Patrick and the Senate moved forward with plans to boost the homestead exemption.

But one week before the end of the special session, Bettencourt, the chamber's point person on property taxes, offered a compromise bill that raised the homestead exemption, included Abbott's compression strategy and gave more businesses a break on their franchise tax bills. The proposal also put tighter revenue caps on school districts in a bid to further drive down tax rates.

The Senate also went beyond Abbott's call to increase criminal penalties for human smuggling and operating stash houses by passing bills that would form a state border police force and create a new state crime for illegally entering the country. The two proposals, which would butt up against the federal government's purview over immigration law, echoed calls by immigration hawks for the state to take unprecedented action to stem the record number of migrants crossing the Mexico border.

As the special session dragged on, the state's top three leaders - Abbott, Patrick and Phelan - and their proxies continued to bicker over property taxes on social media, in news releases and text blasts to voters, and at public events.

Patrick posted long statements on Twitter that accused House members of "walking off the job." Abbott threatened and then fulfilled his promise to veto bills if the Senate did not approve his property tax plan.

Still, the impasse dragged on, even as the Senate said its second property tax proposal had been adapted to accommodate negotiations with the House. Abbott also encouraged the two chambers to find common ground, saying he would sign a tax plan that passed the House and Senate. But the House gave no indication that it would return to pass a compromise bill, and no agreement emerged.

Senators also spent considerable time creating rules for suspended Attorney General Ken Paxton's impeachment trial, set to begin Sept. 5 after the House voted 121-23 to approve articles of impeachment accusing Paxton of accepting bribes and using his office to benefit a friend and political donor.

Under the rules, Paxton's wife, Sen. Angela Paxton, R-McKinney, will not be allowed to vote to convict or acquit, nor will she participate in deliberations. But the senator will be allowed to attend the trial. Permanently removing Ken Paxton from office would require the agreement of 21 of the 31 senators.

The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans - and engages with them - about public policy, politics, government and statewide issues.