Legislators expected to finalize tax cuts, two-year budget plan

AUSTIN — Public schools would get a $1.5 billion funding boost over the next two years under a Wednesday vote by legislative budget negotiators, who also left room for $1.2 billion in school propertytax relief for homeowners.

Shaping a two-year spending plan that’s expected to add up to some $210 billion, House and Senate budget-writers additionally agreed to put $800 million into border security.

That’s enough to keep the National Guard on the border, as sought by the Senate, while upping law enforcement through the Texas Department of Public Safety and grants to local agencies.

The budget is the mustpass bill of any legislative session, since it funds state government services and infrastructure.

The negotiators are expected to finalize the plan before the legislative session’s end on June 1, or face another legislative session.

Budget negotiations, and talks on other top issues including border security, have been going on simultaneously with efforts to hammer out a multi-billion-dollar tax cut.

House and Senate leaders said Wednesday, as they have for days, that they were close to nailing down a tax agreement.

Homestead exemption

The tax-cut package includes a bigger homestead exemption that will mean $126 annually to the average homeowner, an amount that even supporters said is likely to be eclipsed by local factors including higher appraisals, particularly if there’s no other legislative action to address that issue. It also includes a 25 percent across-the-board cut in the state business tax.

Senate leaders have pressed for implementing the property tax cuts quickly, rather than waiting a year. House leaders have voiced concern about the cost and pressure to local entities to have the necessary election and ensure tax bills are accurate if it’s done that quickly.

The presence of the $1.2 billion figure in the budget, an amount that would cover two years’ worth of property tax relief, was an encouraging sign for supporters of the Senate approach.

Even assuming two years of property-tax relief, the estimated $3.8 billion tax-cut package is smaller than the one initially contemplated by either the House or Senate.

Senate Finance Committee Chair Jane Nelson, R-Flower Mound, said some lawmakers were reluctant to go with a higher tax-cut figure. Among other factors, leaders have been closely monitoring the economic effect of uncertainty in the oil and gas industry.

“We were all excited at the beginning of the session, and then we’ve learned some things. And I’m not alarmed, but we thought we should be cautious,” Nelson said. “You find the sweet spot, and $3.8 (billion) is the sweet spot.”

Controlled locally

House Ways and Means Committee Chairman Dennis Bonnen, R-Angleton, and others have voiced concern that the tax savings to homeowners quickly would be eaten up by factors including higher appraisals. He has repeatedly pointed out that property taxes are controlled locally.

Asked if such concerns are realistic, Nelson said, “Yes. … I live in an area where prices are skyrocketing, so yes, that’s something we need to address and that’s still very much a part of the discussion.”