House votes to raise homestead exemption on school taxes

Measure would save average homeowner $120 a year.

The Texas House on Sunday unanimously approved legislation that would increase the state homestead exemption on school property taxes to $25,000 — one component of a $3.8 billion compromise tax cut package that also reduces business levies.

Senate Bill 1 is expected to save the average Texas homeowner more than $120 per year — assuming voters approve it this November. (The House also unanimously approved a constitutional amendment Sunday that requires voter approval for the change).

However, the House’s lead tax writer said repeatedly Sunday that the benefits of a $25,000 homestead exemption are sure to disappear within a few years amid rising appraisals. The exemption has been $15,000 since 1997.

“We are lessening the pain to a small extent,” said state Rep. Dennis Bonnen, R-Angleton during an hourlong debate marked by a palpable lack of passion for the measure.

Earlier in the legislative session, the House unanimously approved a sales tax cut Bonnen proposed as part of a $4.9 billion tax cut package. However, the House agreed to drop that proposal during informal tax cut negotiations with the Senate, which insisted on a property tax break.

How to cut taxes has been the most high-profile disagreement between the two chambers this session, which ends June 1.

The House approved a handful of tweaks to SB 1 Sunday, including one that would add $400 million to its $1.2 billion price tag. That change, by state Rep. Senfronia Thompson, D-Houston, would help school districts with the cost of maintaining their local optional homestead exemptions, which would be frozen under the bill — a provision meant to ensure they don’t decrease local exemptions to offset the higher state exemption.

“They’re going to suffer from it unless we do something about it,” Thompson said.

Another successful amendment to SB 1, by Bonnen, clarified that the constitutional amendment election will take place in November.

SB 1 now calls for local tax collectors to reflect the higher exemption in 2015 property tax bills and inform homeowners that they may have to retroactively pay the difference in the event that voters reject the higher homestead exemption.

Comptroller Glenn Hegar blessed that approach in a letter to state leaders over the weekend.

SB 1 now heads to the Senate, which must decide whether to concur with the changes the House made.