AUSTIN, Texas (AP) — Billions of dollars in tax cuts promised by Texas Republicans have shrunk over concerns of an economic slowdown, and one architect of the plan conceded Wednesday that heralded savings for homeowners could be short-lived.
With less than two weeks left in the Legislature, top lawmakers are still finalizing $3.8 billion in tax cuts that at times has plunged the first session under Republican Gov. Greg Abbott into gridlock and infighting. Budget writers now say a deal could be done by week’s end, which would give Republicans a victory to bring home to conservative voters.
But the savings are less robust than what lawmakers bragged was possible, and whether the average Texas homeowner would consider roughly $120 off property tax bills as significant relief remains a target for critics.
One powerbroker of the tax cut package, Republican Senate Finance Chairwoman Jane Nelson, didn’t dispute that a $10,000 homestead exemption increase could be swallowed by soaring home appraisals. She said potential fixes remain in play before the session ends June 1.
“I live in an area where prices are skyrocketing. So yes, that’s something we need to address, and that’s still very much part of the discussion,” said Nelson, who is from Flower Mound.
Abbott told lawmakers in February that property tax reduction “must be lasting” and can’t be allowed to evaporate by rising property values. Opponents are doubtful that is possible.
For months, House Republicans had pushed cutting sales taxes instead of property taxes, arguing that the savings to homeowners would be small and fleeting. They relented during negotiations.
“I think the odds of people saying, ‘Thank you, Texas Legislature, for cutting my taxes’ is going to be pretty small,” Democratic state Rep. Chris Turner said.
What already appears settled by House and Senate Republicans is the bottom-line tax cut number— about $1 billion lower than what House Republicans once proposed and a half-billion less than Abbott sought after taking office in January. Even back then, the Legislature returned to work amid tumbling oil prices and evidence that the roaring Texas economy was slowing. The state comptroller predicted falling tax revenues but still gave Republicans enough confidence to push ahead with seeking the biggest tax cuts in a decade.
But more signs of volatility — Texas payrolls lost jobs in March for the first time in four years— have scaled back ambitions.
“We were all excited at the beginning of session and we’ve learned some things,” Nelson said. “I’m not alarmed, but we thought we should be cautious.”
More than $2 billion of the tax cuts would cover an across-the-board break for Texas businesses. Voters, meanwhile, would have to approve raising the homestead exemption at the ballot box this fall.
The tax package is part of a broader budget deal that lawmakers must approve before going home. That includes more than doubling spending on border security, which Abbott labeled as another priority.