Texas Senate backs tighter cap on local property tax hikes

The Texas Senate voted Aug. 6 to approve Senate Bill 9, a measure that would lower the cap on property tax increases for cities and counties with populations above 75,000. If it becomes law, the bill would apply to major Central Texas cities such as Austin, Leander and Cedar Park.

The bill, authored by Sen. Paul Bettencourt, R-Houston, reduces the cap on the maintenance and operations portion of property tax growth from 3.5% to 2.5%. Any increase beyond that threshold would require voter approval.

New construction added to the tax rolls would be exempt from the cap, as would cities and counties with fewer than 75,000 residents.

Gov. Greg Abbott placed property tax relief on the agenda for the current special session, which runs through Aug. 19. He has criticized local governments for raising rates, citing Harris County’s 2024 tax increase and a proposed 24% increase in Austin as examples the bill seeks to curb.

Bettencourt said city and county property taxes are rising about 3% faster than school district taxes and that combined local rates in some areas now exceed school taxes. He argued that lower tax rates could also help attract businesses, growing the property tax base through economic development.

Jennifer Rabb of the Texas Taxpayers and Research Association supported the bill, saying it would put more tax rate decisions directly on the ballot. Glenn Hamer, CEO of the Texas Association of Business, said it promotes smarter budgeting and accountability.

Some local leaders argued that a single statewide cap is too rigid. Hays County Judge Ruben Becerra said targeted solutions would work better. Adam Haynes of the Texas Conference of Urban Counties said cities should be allowed more flexibility in years with unusual cost pressures.

Shannon Halbrook of the nonprofit Every Texan noted that property taxes fund essential services and cities like Leander and Cedar Park need the ability to respond to local needs.

Richardson officials said the measure could cut their property tax revenue by about $750,000 in fiscal year 2025-26, which accounts for roughly 42% of their budget.

The bill now moves to the Texas House, but progress is stalled due to a lack of quorum. Voters will also decide on three separate property tax relief measures in November, including higher homestead exemptions for school district taxes and increases for elderly and disabled homeowners.