On March 22, 2023, Texas senators approved a massive tax cut, which will give more money to schools while offering larger tax breaks to home and business owners.
According to WFAA, the tax break brought forth by Lt. Gov. Dan Patrick contained three separate bills and was approved unanimously. The cut was made possible by the record-breaking $33 billion surplus.
“This is off-the-charts, incredible property tax relief for millions of Texas homeowners,” said state Sen. Paul Bettencourt.
One of the package’s parts is Senate Bill 3, which was a proposal to raise the state’s homestead exemption for school districts. SB 3 would raise the amount of a home’s value that can’t be taxed from $40,000 to $70,000, with an additional $20,000 for seniors.
Senate Bill 4 was also passed. The bill would require the state to funnel at least $5.38 billion into public schools, on top of the $5.3 billion that Senate budget writers have separately proposed for property tax cuts over the next two years.
But some Democrats were warier when it came to SB4, because the bill, which amends a 2019 landmark school finance law and would cut school property tax rates by 7 cents per every $100 in property value. Senate Democrats warned that Texas won’t have the supply of federal stimulus dollars that were used during the COVID-19 pandemic to cushion the state if the economy tanks. If that were to happen, the state would likely have to raise sales taxes to make up for any shortfall for schools.
Senate Bill 5, a separate measure by state Sen. Tan Parker, was also passed. The bill would cut $1.5 billion in business property taxes.
The proposals will now be sent to the House for further approval. Budget writers in the House also want at least $5.3 billion from the state’s surplus to lower property taxes, but they have some different ideas.
The House’s chief proposal contains $12 billion more in school property tax cuts. That proposal would also cap how much the value of a homeowner’s main residence taxed by school districts can rise each year.
The state’s appraisal cap would move from 10% to 5% and expand the benefit to owners of business properties such as grocery stores, apartment complexes and restaurants.
However, tax experts argue this proposal would make the property tax system more unfair by giving bigger breaks to owners who have owned their property longer.
According to WFAA, the bill passed through the House Ways and Means Committee by a 10-1 vote with Rep. Chris Turner, a Grand Prairie Democrat, casting the only “no” vote.
The tax cuts would provide relief to all Texans, though increases to the homestead exemption would only benefit Texans who own their homes, despite the fact that renters make up roughly 40% of households in Texas.