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Special Session Debate Intensifies At Texas Capitol

The special session of the Texas Legislature is in full swing. A marathon debate Tuesday in the Senate passed SB3, the "bathroom bill," while the House Ways and Means committee spent hours tackling property tax reform.

As debates rage on to break an impasse between the two chambers, there are major implications for commercial real estate.

Texas State Capital
Texas State Capitol Building

After eight hours of contentious debate and tearful testimony, the Senate approved the "bathroom bill" in a 21-10 vote in the wee hours of Tuesday night. The bill calls for regulating bathrooms in public schools and government buildings based on the sex of a person's birth certificate or state-issued ID. Even with the ID provision, added by Sen. Lois Kolkhorst during debate on the floor, the bill will likely be a hard sell to the House, which is prioritizing other items on Abbott's agenda. Speaker Joe Straus is also a vocal opponent of such legislation. 

The House Ways and Means Committee spent several hours Tuesday debating 30 property tax bills, ranging from a reformed appraisal process to exemptions. HB4, authored by committee chair Rep. Dennis Bonnen, received special attention. The bill includes a provision that requires a special election if any municipality plans to increase property taxes on land and buildings by more than 5%. The provision hit a road block during the regular session, dividing the House and the Senate.

Governor Abbott
Texas Gov. Greg Abbott

A similar election requirement is also part of SB1, which was passed by the Senate late Tuesday night. But the Senate's bill sets the threshold at 4%, not 5%, another battle between the two chambers. 

Houston BOMA President Tammy Betancourt was at the Texas Capitol Tuesday in support of property tax reform. She said the atmosphere between the House and Senate was combative. She was surprised to see such animosity.

"It's [palpable]. When you go talk to House members, you shouldn't mention any Senate bills." 

The automatic election requirements are the biggest source of contention. City and county leaders have testified that the requirements would severely limit their ability to provide basic services, forcing them to hold costly elections and finance more debt. 

Bonnen defended the requirements, saying voters have the right to weigh in when local government want to increase tax collections. 

Taxes

At the heart of the property tax debate is the state's contribution to public education funding. In Texas, school districts account for the majority of property tax bills. As the state has lowered its contributions, property taxes have risen to compensate. Bonnen conceded the point in debate, but said the issue can still be dealt with. 

State Rep. Richard Peña Raymond proposed a way around the impasse by introducing a bill and constitutional amendment that would cut school district property taxes one time, using $3B from the state's rainy day fund to cover the savings. 

“If we pass this out of the House, I don’t see how the Senate doesn’t vote on it and pass it, too,” Raymond said of his HB 190 and House Joint Resolution 32.

Texas House Of Representatives
Texas House of Representatives

Senators have debated 14 of the items on Abbott's 20-item agenda, including ending the state's collection of membership fees for certain public employees, legislation regulating do-not-resuscitate orders, and bills financing teacher bonuses and retirement benefits. The Senate also passed a provision that would ban taxpayer funds from going to abortion providers.

While the Senate is burning the midnight oil, the full House met for only 22 minutes on Tuesday, giving final approval for the first of two sunset bills to keep key state agencies afloat. 

With property tax bills soon to make their way out of the House and a bathroom bill already out of the Senate, both chambers must now rely on the other to break the stalemate.