State Leaders Juggle Deals on Five Key Issues

With less than three weeks left in the session, the governor and top legislative leaders are simultaneously negotiating compromises on five bills covering tax cuts, restraints on local property tax increases, border security, prosecutions of state ethics cases and open carry of handguns in Texas.

Officials from the offices of Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Joe Straus met Thursday afternoon with House and Senate leaders in a room behind the House chamber to juggle a complex set of issues that have bedeviled lawmakers for weeks.

“I am hopeful that we will be able to reach a resolution within 24 hours,” Abbott said late Thursday afternoon, referring specifically to the tax cuts.

The terms have not been completed, but several participants said they hope the talks could end multiple legislative standoffs before the end of the regular session on June 1.

The most important discussions involve ironing out differences between the House and Senate on more than $3 billion in tax cuts. Budget writers need a complete tax bill in order to finish their work on the two-year spending plan, which is the most important bill of the session.

Negotiators have proposed ditching the House’s preferred sales tax cut in favor of property tax relief that would cost about $1 billion less than the version passed in the Senate, according to sources in both chambers. It would give homeowners an additional $10,000 in homestead exemptions, enough to save the average homeowner about $125 annually.

Abbott praised the $10,000 homestead exemption as a "way that we can reduce the property tax burden for Texans."

The deal would take the House's preferred approach to cutting the business franchise tax — a 25 percent across-the-board cut — rather than the Senate's approach, which would combine a smaller cut in rates and a provision freeing a large number of businesses from paying any tax at all.

Linked to that is the push for some restraints on local elected officials' ability to raise property tax rates. The state doesn't set those rates, but state officials have heard plenty from voters about property taxes. Senate Bill 1760, from state Sen. Brandon Creighton, R-Conroe, aims to make the administration of local property taxes more transparent, directing the comptroller to publish a ranking of property tax rates statewide and requiring local entities to justify future tax increases on election notices and ballots. 

It drew the alarm of some local officials after state Sen. Paul Bettencourt, R-Houston, successfully added an amendment that raises the threshold for school boards, city councils and other local governments to raise taxes from a simple majority to 60 percent. That turns out to have little effect on county commissioners courts and most of the state’s school boards. Legislative leaders and the governor's office have tentatively agreed to back Creighton's bill, including Bettencourt's amendment. Patrick has touted the bill as a key measure in efforts to reform the property tax system in Texas.

The proposed tax deal represents a tricky balancing act for House leaders who had predicted the Senate’s original proposal would be viewed as underwhelming to Texas homeowners but who now may agree to even less property tax relief.

Bettencourt said there is “no question” that the Senate is united on preferring property tax cuts over sales tax cuts. A sales tax cut passed the House unanimously last month, but some members have said they prefer a property tax cut.

“In this particular case, we probably have as many cooks in the kitchen as we do chefs, but I suspect that if everything works out, we’ll have 183 happy fathers and mothers of a compromise,” he said.

Both the House and Senate have passed legislation that would keep some state police and possibly National Guard troops on the Texas-Mexico border, and each has stalled in the other chamber. Negotiators on Thursday were said to be leaning toward the House version.

And both have taken a stab at taking state ethics prosecutions away from the Travis County district attorney's office, where the public integrity unit is currently housed, to the Texas Rangers. The PIU currently focuses on public corruption, insurance fraud and tax fraud. Some Republicans believe partisan motives underlie the Austin unit’s public corruption prosecutions and want to move those operations to a neutral office.

Negotiators are leading toward the Senate's approach, which would allow lawmakers and state employees to face prosecution in their home counties for alleged crimes committed in Travis County in connection with their work in state government.

And then there is the issue that made headlines on the very first day of this legislative session, back in January — open carry of handguns for licensed adults. State law currently allows the open carrying of rifles and shotguns. Concealed handguns may be carried by anyone with a license. Both the House and Senate have passed open carry bills, and they have tentatively agreed to proceed with the version in House Bill 910.

Matthew Watkins contributed to this report.