First special session ends with no new laws, Texas lawmakers still deadlocked on property taxes

Gov. Greg Abbott quickly called lawmakers back to the Capitol for round two, hoping to break an impasse that has outlasted the regular session and one overtime period.

First special session ends with no new laws, Texas lawmakers still deadlocked on property taxes
Photo by Natilyn Photography / Unsplash

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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 districts to help them lower their property tax rates.

“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.

Abbott added that special sessions will “continue to focus on only property tax cuts until property tax cut legislation reaches my desk.”

Tuesday evening, Lt. Gov. Dan Patrick, who presides over the Senate, struck a combative tone in a news release, saying senators will continue to insist on increasing homestead exemptions in addition to Abbott's preferred method of compressing school property taxes.

“We will pass the same bill that we passed to the House last week that cuts school property taxes for the average homeowner by nearly 43%, almost double the tax cut one would receive with only compression,” Patrick said.

“The Texas Senate will continue to fight for homeowners, and we look forward to working with the House to pass property tax relief legislation in the coming weeks,” he said.

Patrick also blasted Abbott’s call to put the state on a path toward eliminating property taxes, saying it was unrealistic and would require “increasing the sales tax dramatically.”

Both chambers set plans to convene at 11 a.m. Wednesday.

Abbott’s 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.

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.

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 cutting property taxes through 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 Patrick and state Sen. Paul Bettencourt, R-Houston, pursued a plan that would also 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 House Speaker Dade 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.

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