On Tuesday Senate leaders alongside Lt. Governor Dan Patrick announced the specifics of their tax relief proposals. State Sen. Jane Nelson (R-Denton), the Chair of the Finance Committee, unveiled the specific details of what had previously been a blanket line item of approximately $4 billion.
Nelson’s plan, SB1, would allocate nearly $2.5 billion in tax relief. The measure will require a constitutional amendment approved by voters, but if passed Texans would receive a much needed reprieve on their property tax bills.
Specifically, Nelson’s bill would raise the homestead exemption permanently to 25% of the median home value in the state as determined by the Legislative Budget Board. Current law has set the exemption at a flat, unadjusted $15,000 in nominal home value since 1997. In addition to being too low a threshold, the current homestead exemption works numerically, rather than through a percentage of home value. In other words, its impact diminished as property values increased. Under Nelson’s proposal the percentage exemption would grow proportionally with rising values in the housing market.
“Home values obviously have risen through the years but the homestead exemption has remained flat,” said Nelson said during a news conference.
In unveiling the bill, Nelson was flanked by a number of Republican senators and noted the widespread bipartisan support of the legislation. Joining the vast majority of the Senate Republican Caucus are five Democratic senators, placing the number of authors at 23 and making it abundantly clear the measure can pass the Senate. Notably absent were Republican State Senators Eltife (R-Tyler) and Seliger (R-Midland), the only two Republicans who have not yet signed onto the legislation.
Additionally, the Senate addressed plans to cut business taxes by reducing the size and the scope of the franchise tax through Senate Bills 7 and 8.. The former would slice the rate that businesses pay by 15%, the latter would raise the minimum threshold ($4 million in revenue) that businesses must reach before being forced to pay the tax.
According to sponsor, State Sen. Charles Schwertner (R-Georgetown), the reform would remove nearly half of all business owners from the burden of the franchise tax system.
Both pieces of legislation have a large number of co-authors as well, making them likely to pass as well, adding another $2.1 billion for a total of more than $4.6 billion in total tax relief.
Lt. Governor Dan Patrick lauded all of the proposals, stating he was proud of the Senate for following Governor Abbott who also called for “lasting tax relief” in his State of the State address last week.
“I’m pleased to support one of the largest and most significant tax relief packages in the history of Texas,” said Patrick.
The aforementioned reforms are an encouraging starting point for the Senate as it moves forward on the budget process. Additionally, next week the Senate Finance Committee will be conducting hearings on further tax relief, as the legislature is projected to have nearly $10 billion in surplus available for tax relief, excluding any additional measures that reform spending or control government growth.