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Texas Senate Passes Major Tax Reform Package, SB2 and SB17
Wednesday, March 22, 2017 7:00 AM

On Tuesday, SB 2, the Property Tax Reform and Relief Act by Sen. Paul Bettencourt (R-Houston) passed the Texas Senate on an 18-12 vote.

The bill was the culmination of the work performed by the Interim Senate Select Committee on Property Tax Reform and Relief that traveled across the state and took 50 hours of public testimony, much of it from frustrated taxpayers who were afraid of being taxed out of their home or business by ever-rising property tax bills.

Texas property owners currently pay the sixth-highest property taxes in the country, and among those taxpayers are credit unions. Proponents of the bill see the measure as a way to rein in what they say is local government’s over-reliance on increasing property values to fund larger local budgets.

SB 2 adds more transparency and simplification to the appraisal process and the local tax rate-setting process. The key provisions of SB 2 include reducing the rollback rate from 8 percent to 5 percent for local taxing entities, and it requires an automatic rollback election if the local taxing entity exceeds the rollback rate. These two measures are meant to educate and encourage voter participation in the tax rate-setting process.  

Other provisions include:

  • Standardizing tax ratification elections across the state by requiring they be held on general election dates;
  • Statutorily setting the deadlines for all property tax protests filed in Texas to May 15, thereby eliminating confusion by owners of multiple classifications of property owners; and
  • Establishing specialized administrative review board panels, in counties with a population of 120,000 or more, to hear more complex taxpayer protests.

Opponents of the bill maintain that it limits the amount of revenue a local taxing entity may generate. The bill now moves to the Texas House where the chairman of the House Ways and Means Committee, Dennis Bonnen, has filed a similar bill, HB 15, for property tax reform and relief.

SB17 by Sen. Jane Nelson (R-Flower Mound) was approved by the Senate on a 23-7 vote. The bill mandates a cut to the franchise tax in every two-year state budget cycle. Half of any revenue growth above 5 percent would be used to cut the franchise tax rate until the franchise tax is eliminated.

Credit unions remain exempt from the franchise tax in the bill.

The proposal now will go to the Texas House for consideration.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.