Dade Phelan directs House leaders to revisit vouchers, property taxes in the next legislative session

House Speaker Dade Phelan speaks with other representatives during a special legislative session at the state capitol in Austin, Texas, on Nov. 17, 2023. (Julius Shieh/The Texas Tribune, Julius Shieh/The Texas Tribune)

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House Speaker Dade Phelan directed his committee leaders to examine the use of school voucher-like programs in other states and consider new ways to further drive down property taxes for homeowners.

Released Wednesday, Phelan’s list of priorities includes a broad range of policy issues, from evaluating housing prices and the closures of rural pregnancy centers, to revisiting previous, contentious legislative debates over foreign ownership of Texas agriculture land and determining whether the state has “sufficient resources” at the U.S. Mexico border.

The Beaumont Republican issued his interim charges for the next Legislative session starting in January, even as it remains unclear whether he’ll still be a member of the body by then.

[Lt. Gov. Dan Patrick lists housing affordability, fighting antisemitism on campus among 2025 priorities]

Phelan will square off in a highly-consequential, May 28 GOP primary runoff against challenger David Covey, who has received significant support from Phelan’s political foes – including Lt. Gov. Dan Patrick. Last month, Patrick released his own list of priorities for the Texas Senate next year and, like Phelan, highlighted border security, housing affordability, property tax relief and the impact of environmental, social and governance (ESG) policies on public investment funds.

The release of Phelan and Patrick’s respective priorities follows more than a year of vicious and public fighting between the two over, among other things, the impeachment of Attorney General Ken Paxton, school voucher programs and property tax relief.

On border issues, Phelan and Patrick are both asking for reviews of the state agencies’ involvement in Operation Lone Star, and whether they have sufficient resources. And both have also highlighted foreign ownership of Texas agricultural land and facilities as a cause for concern — potentially reviving contentious debates from last year, when a proposal to ban dual citizens from China, Russia, North Korea and Iran from owning Texas was significantly scaled back following months of protests.

On the school voucher front, Phelan has requested that lawmakers study the use of education savings accounts in other states, and to “make recommendations for a Texas program.” The directive comes after similar legislation was defeated by a coalition of rural Republicans and Democrats last year, delivering a major blow to Gov. Greg Abbott on one of his key policy objectives. In response, Abbott spent more than $6 million to oust nine incumbent Republicans who opposed the program, and the governor is hoping to notch at least two more wins in this month’s runoff elections that would likely be enough to push voucher programs across the finish line next year.

Phelan has taken heat in his own primary among Republicans who say he did not go far enough to advance school vouchers. As is often customary for the speaker, Phelan didn’t cast a vote on vouchers. But he later told The Texas Tribune he would have supported a scaled back version of the program, as opposed to the universal eligibility that Abbott promoted.

After passing a $12.7 billion property tax-cut package last year that appears to have driven down tax bills for many homeowners, the state’s top Republicans have signaled they’re not done trying to rein in Texans’ property taxes, among the highest in the nation.

Phelan, in particular, wants to revisit an idea that proved a major dividing line between him and Patrick last year as the two GOP leaders duked it out over the tax-cut package.

Phelan and House Republicans backed a proposal to tighten the state’s cap on annual increases to a home’s taxable value from 10% to 5% — an attempt to quell complaints from homeowners about fast-rising appraisals spurred by the state’s robust economic growth, which they saw as the root cause of rising tax bills. Patrick and Senate Republicans balked at the proposal, successfully pushing instead for a boost in the state’s homestead exemption. Phelan’s idea to further cap homesteads’ appraisals died, though lawmakers did pass a temporary cap on some business property appraisals.

Now, Phelan has signaled he wants to continue exploring the idea of tightening the cap — instructing the House Ways & Means Committee to explore “whether to further reduce the limit on appraised value of homesteads.” Tax-cut experts across the political spectrum have warned that tightening the appraisal cap would create greater inequities between taxpayers, disproportionately benefit wealthy homeowners and drive up housing costs.

Phelan also wants the committee to look into whether the state can afford to put more money toward cutting school districts’ tax rates as it did last year and whether to keep the state’s homestead exemption on school district taxes at $100,000.

Leaders of both chambers want lawmakers to address the state’s housing affordability crisis amid high home prices and rents.

One way they could do it: relaxing city restrictions on what kind of housing can be built and where. Phelan instructed a House panel to “examine factors affecting housing attainability and affordability in Texas, including state and local laws impacting supply and demand for housing, barriers to construction resulting from zoning practices and the availability and costs of housing outputs.”

Housing advocates have increasingly targeted city zoning restrictions that dictate how much land a single-family home must sit on and how many homes can be built on a particular lot. Those rules, advocates and housing policy experts argue, prevent the construction of enough homes to meet demand — and drive up home prices and rents as a result.

Texas lawmakers quietly considered tackling cities’ zoning restrictions last year, but those measures mostly died quietly in the House after passing the Senate. There could be common ground between leaders of the two chambers on the zoning front: Patrick also signaled that he wants lawmakers in his chamber to consider similar proposals. Texas Republicans and conservative policy wonks have lately shown a new appetite for such ideas.

The state’s top three Republican officials have all now expressed concerns that Wall Street is potentially playing too big of a role in the state’s homebuying market and boxing would-be homebuyers out of their first home. Phelan wants House lawmakers to “evaluate the impact on housing prices and rent caused by institutional buyers,” meaning investors and corporations that buy single-family homes to rent them out, in order to “determine what policy changes are needed to ensure families and individuals are not unfairly priced out of homeownership.”

Lawmakers are also paying increasing attention to Texans’ rising homeowners insurance premiums — among the highest in the nation. Insurance rates for Texas homeowners grew faster than in the rest of the country last year, driven by increased risk from extreme weather events.

Phelan told the House State Affairs Committee to examine what’s driving insurance premiums and to “investigate solutions to help Texans more easily and affordably obtain property and casualty insurance coverage.”

Phelan has also asked for “legislative solutions” to prevent wildfires and improve wildfire disaster response. The move follows historic fires in March that burned more than 1 million acres in the Texas Panhandle.

Phelan also directed the Health and Human Services committee to investigate the role the state should play in Medicaid contracts and managed care, an issue that has brought some heat on Texas state human services officials in recent years over hundreds of billions in canceled procurements that have spurred lawsuits.

A recent decision by Texas Health and Human Services to drop indigent health plans run by three legacy children’s hospitals from the Medicaid program triggered loud protests from some lawmakers over the methods the state used in evaluating managed care organizations for some $116 billion in new contracts. The proposed changes, which haven’t been finalized yet, would affect six managed care organizations across the state and shuffle the health plans of some 1.8 million low-income Texans, including children, in late 2025.

Karen Brooks Harper contributed to this report.

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