A cheer went up on the chamber floor upon the near-unanimous passage of the three bills that comprise the package.
AUSTIN, Texas — Legislation creating a landmark $18 billion tax cut for property owners in the state won approval in the Texas House on Thursday, sending the plan to Gov. Greg Abbott’s desk and ending a monthslong stalemate among the state’s top Republicans.
“We knew … the most contentious issue that we faced was how to return these dollars to the taxpayers,” House Speaker Dade Phelan told House members Thursday evening. “Congratulations to you, but more importantly, congratulations to the taxpayers of Texas. They are the big winners.”
A constitutional amendment required to enact the cuts was still awaiting Senate approval late Thursday.
House Democrats attempted to insert benefits for renters and more money for public education into the tax-cuts package in a series of floor amendments but were unsuccessful.
A cheer went up on the chamber floor upon the near-unanimous passage of the three bills that comprise the package.
Senate Bill 2, which details the proposed property tax cuts, passed the House 132-4; Senate Bill 3, a franchise tax relief bill, passed 127-5. House Joint Resolution 2, was approved 132-5.
The package puts $12.6 billion of the state’s historic budget surplus toward making cuts to school taxes for all property owners, dropping property taxes an average of more than 40% for some 5.7 million Texas homeowners, and offering brand new tax savings for smaller businesses and other commercial and non-homesteaded properties. The voters would need to approve the package in November for the cuts to take effect this year.
At a time when the state has some of the highest property taxes in the nation and lawmakers face massive political pressure to ease the financial suffering of their constituents, Abbott has said he will sign the legislation — a cornerstone of his 2022 reelection campaign and that of most state lawmakers for several cycles now.
The marquee item in the package is a $5.3 billion expansion of the state’s homestead exemption from $40,000 to $100,000. Houston Republican Sen. Paul Bettencourt, the architect of the package, said the new exemption combined with the school tax cuts would save homesteaders — Texans who live in a residence they own — an average of $1,300 a year in property taxes.
It also offers additional cuts for seniors and property owners with disabilities, averaging about $170 more per year, Bettencourt said.
The most novel part of the plan, an idea introduced publicly for the first time on Monday, is a first-ever temporary 20% cap on appraisal increases for properties valued at $5 million or lower that aren’t considered homesteads. Those would include second homes, vacation properties, rental houses, or commercial retail or business properties.
Leaders have referred to that part of the bill as a “circuit breaker” program, but it’s somewhat of a misnomer. Unlike programs in other parts of the country with the same name, the Texas proposal does not calculate property taxes based on a person’s income or ability to pay, nor does it specifically seek to benefit lower-income taxpayers.