DALLAS - With little debate, the Texas Senate approved $4.6 billion of property tax cuts for homeowners on March 25.
Senate Bill 1 by Sen. Jane Nelson, R-Flower Mound, would require voter approval to become a constitutional amendment. The measure passed on a vote of 26-5.
Lt. Gov. Dan Patrick, the Senate's presiding officer, stood with Nelson in support of the measure as the 2015 legislative session opened.
"Rather than spend excess revenue, the Senate has voted to return $4.6 billion to Texas homeowners and businesses over the next two years," Patrick said in a statement after passage.
The bill provides a new formula for the state homestead exemption, raising the sheltered amount from the current $15,000 to 25% of the median market value of a Texas home.
"The homestead exemption has not been updated since 1997," Nelson said. "Since that time home values have risen along with property tax bills but the homestead exemption has remained flat. We need to bring relief to homeowners."
State Sen. Rodney Ellis, D-Houston, questioned whether the measure was fair, since most of the state's revenue comes from sales taxes. Property taxes provide revenues for local governments but are regulated by the state. SB 1 affects property taxes for school districts.
"We have one of the highest sales taxes in the country," Ellis said. "Our system of taxes is considered one of the most regressive."
A "hold harmless" provision in the bill would provide revenue to school districts to compensate for the lost property taxes, Nelson said. About $2.4 billion of the tax cuts come from school property taxes.
The only Republican opposed to the measure was Sen. Kevin Eltife, R-Tyler, who said he prefers to pay off state debt and tend to deferred maintenance before cutting taxes.
After Senate passage of the measure, State Rep. Dennis Bonnen, R-Angleton, chairman of the House Ways and Means Committee, said he plans to introduce an even larger $4.8 billion tax cut next week.
Texas carries ratings of triple-A from Moody's Investors Service, Standard & Poor's and Fitch Ratings.
