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Texas Senate budget chiefs promise $4.6B in tax cuts

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AUSTIN, Texas (AP) — Top Texas conservatives are now seemingly one-upping each other by pledging deeper and deeper tax cuts as part of the 2016-2017 budget, with all sides insisting that the state’s economy will stay strong enough to cover the costs of vital services despite the loss in revenue.

Lt. Gov. Dan Patrick and Senate Finance Committee Chairwoman Jane Nelson announced two bills and a proposed constitutional amendment Tuesday. Those and other top proposals would mean $4.6 billion in total property and business tax cuts, outpacing the $4 billion Patrick and Nelson had initially promised and constituting what they called some of the most substantial “tax relief” in state history.

“It’s been long, long overdue and the people have spoken clearly about what they want,” Patrick said at a Capitol news conference, flanked by Nelson and more than a dozen other senators who are co-sponsoring tax cut plans.

Patrick, who oversees the flow of Senate legislation, added of taxpayers: “Remember, this is their money and they need as much back as we can send them.”

That announcement came a day after Rep. Dennis Bonnen, an Arlington Republican and the House’s chief budget writer, said proposals in the lower chamber would also likely top Patrick and Nelson’s previous $4 billion pledge. Gov. Greg Abbott has also called for $4.5 billion in tax cuts over the biennial budget cycle.

Budget drafts hammered out in the Senate and House will eventually have to be reconciled in committee before each chamber can vote on any final versions of new cuts. That means the process is only just starting — but tax cuts are already driving the debate.

Critics, though, note that easing tax burdens for home and business owners ensures that the bulk of the windfall will go to wealthier segments of Texas’ population.

The centerpiece of the Senate plan would expand homestead property tax exemptions for homeowners, providing $2.5 billion in tax reductions. Nelson said the homestead exemption hadn’t been increased since 1997, and that her plan would allow homeowners to claim exemptions worth 25 percent of the median home value statewide.

That would mean about $200 annually per average homeowner. The plan includes an amendment to the Texas Constitution increasing the homestead exemption in future years, trying to ensure that tax cuts don’t evaporate if home prices rise across Texas.

Other Senate proposals would reduce Texas’ business tax rate by 15 percent while exempting companies with total annual revenue of $4 million or less from paying it. It would amount to a $1.5 billion cut.

The plans were immediately applauded by the Texas Association of Business, but some Democrats have called for more progressive tax strategies to benefit more Texans. They’ve also worried that a scramble to slash taxes would come at the expense of public education and other services — especially if oil prices stay low, crimping large swaths of the state economy.

“I caution state leaders to consider all of our state’s priorities and infrastructure needs before significantly depleting our state’s revenue sources,” San Antonio Democratic Rep. Trey Martinez-Fischer said in a statement Tuesday.

Patrick countered that cuts were possible without reducing services. He said that will remain true, even if the Texas Supreme Court eventually upholds a state district court decision declaring Texas’ public school funding inadequate and unfairly distributed — thus obligating the Legislature to devise a sweeping new school finance formula.

“We’re going to do both,” Patrick said. “There’s room.”

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