Commentary for Proposition 4 (HRJ 2 Special Session)
Proposition 4 would authorize the state of Texas to enact a proposed $12.7B in property tax relief. Here’s the language you’ll see on your ballot.
The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term for a member of the board of directors of certain appraisal districts.
I think you’ll agree, that’s a mouthful. But what does it mean exactly? Here’s what’s included in the $12.7B property tax relief:
School tax compression - $7.1B will be sent to Texas schools so they can lower the taxes on property owners. It will lower the maintenance and operations (M&O) property tax rate by 10.7 cents per $100 of a property’s valuation. The M&O pays for things like teacher’s salaries. Note that this is for all property owners so it’s for businesses as well as someone’s second house, they’ll get the break too. Also note that schools will not see an additional penny. This $7.1B simply replaces the money they’ll lose when they compress the tax rate.
$100,000 homestead exemption - an estimated $5.6B will be used to more than double the current $40,000 homestead exemption. This only applies to homesteads - not businesses or rental properties.
Temporary 20% cap - for businesses and non-homestead residences that are valued under $5M, there will be a 20% cap in increases to appraised values annually.
Elected officials - most county appraisal board members are appointed. If passed, this will make at least three of the board’s positions, elected positions.
The state of Texas got the surplus because of sales taxes and the price increases that occurred because of inflation and supply chain issues when we emerged from the pandemic. Everybody paid for the surplus - businesses, homeowners, and renters. But not everyone will get the benefits of this tax relief. Only businesses and homeowners will get a break.
Also, what isn’t clear is how this will get paid for in the future. What happens when we don’t have a record surplus?
While I, like everyone else, think our taxes are too high, this isn’t a fair tax relief bill. Nor is there a road map for what happens to our already underfunded public schools when times aren’t as good. While I certainly understand why people will vote for it, I intend to vote NO.
Michelle LoweSolis BCDP Communications Co-Chair and SDEC SD25 Committee Member
Click HERE to view all the proposed Amendments to the Texas Constitution for the November 2023 Ballot.
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