DALLAS - Gov. Greg Abbott and leaders of the House and Senate have agreed to support a $3.8 billion tax cut package for businesses and property owners while abandoning a sales-tax cut approved by the House.
The agreement announced May 21 came as the legislature entered the last week of its 2015 session and a House-Senate conference committee worked to resolve differences between two versions of the state's $211 billion budget.
"Every dollar businesses and homeowners pay in taxes is a dollar that could be invested in new jobs, higher wages and stimulating the Texas economy," Abbott said in the announcement. "I commend the speaker and lieutenant governor for working with us to achieve meaningful tax relief for Texans."
The agreement would reduce the business margins tax by 25% and increase the homestead exemption for property owners by $10,000. To protect the property tax cut from local adjustments, the leaders agreed to support Senate Bill 1760, which would require a 60% vote of a local governing body to exceed the state's effective tax rate.
"This agreement will allow the House to vote on tax relief that encourages economic growth," said Straus. "I look forward to working with my House colleagues to approve this plan as part of a successful end to our legislative session."
Lt. Gov. Dan Patrick, the presiding officer of the Senate, had vowed not to compromise with the House on the form of the tax cut. The House had approved the first sales tax cut in the state's history, with supporters arguing that it was the only tax cut the state could guarantee. They also argued that it would be a broader form of tax relief.
"It is a major achievement to come to an agreement on such a broad spectrum of significant legislation," Patrick said. "I believe when this session concludes it will be one of the most, if not the most, productive legislative sessions in the history of the Texas Senate and the entire legislature."
Increasing the homestead exemption for fiscal years 2016 and 2017 will require a statewide vote to amend the constitution. That election would be held in November, according to the latest version of Senate Bill 1 and Senate Joint Resolution 1.
Under those measures, county tax assessors would send out a "provisional" property tax bills before the November election showing what a homeowner would owe in property taxes if the constitutional amendment passes and if it doesn't.
