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Tax cut deal struck with end of Texas Legislature in sight

🕐 2 min read

AUSTIN, Texas (AP) — A newly struck budget deal is giving new Republican Gov. Greg Abbott the tax cuts he demanded but remains blemished by skepticism that Texas homeowners will notice any savings.

Ending weeks of discord between the House and Senate, the agreement late Thursday on a $3.8 billion package of new exemptions puts Abbott close to signing Texas’ biggest tax cuts in a decade and the bragging rights of finishing his first legislative session on time.

Republicans campaigned hard on tax cuts in 2014, and after the Legislature adjourns June 1, they can boast to voters back home they delivered. But even House Republicans have doubted their base will feel roughly $120 knocked off their property taxes, given fast-rising home appraisals in Texas.

The deal also isn’t as robust as what Abbott and other Texas GOP leaders spent months promising. Earlier proposals called for as much as $1 billion more in tax cuts, but shrunk at the bargaining table amid concerns over a downturn in the oil and gas industry and recent statewide job losses.

Abbott said the cuts were nonetheless meaningful.

“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.

Abbott told lawmakers in February that property tax reduction “must be lasting” and can’t be allowed to evaporate by escalating property values. Included in the deal are efforts to constrain local governments from raising taxes and wiping out a $10,000 homestead exemption increase.

Voters must still approve the cuts in November.

Abbott announced the deal after House and Senate negotiators agreed on the broad strokes of a roughly $210 billion new two-year budget. It includes more than $800 million on border security — more than double what Texas spends now.

Like tax cuts, border security was a top-line issue for Republicans during a dominant election year in Texas. But as the session winds down, leading tea party groups that carried Republican candidates during fierce primaries a year ago are signaling frustration with the finish line approaching.

On Thursday, a coalition of tea party activists circulated a letter that asked whether Abbott, new Republican Lt. Gov. Dan Patrick and others would wind up “failing” this session over not working long or hard enough to pass their agenda. Some are members of the same “grass-roots” advisory board that Patrick, in an unusual move, hand-picked this session to help guide his decision-making.

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