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Texas homeowners and businesses will cut thousands of dollars from their property tax bills in the coming years after voters approved a constitutional amendment Tuesday that would change the way public schools are funded.
Houston Republican Sen. Paul Bettencourt, the bill’s author, said, “Fighting for property tax reform, Lt. “Governor Dan Patrick and I have been working together for almost 20 years,” he said. “It’s great to see everyone’s hard work pay off, to see the public get the property tax cuts they’ve always wanted and deserve. Over budget collections are great for people getting their money back.
Proposition 4, an $18 billion property tax cut package, was approved by 84% of voters in Tuesday’s constitutional amendment election, according to Resolution Desk headquarters. More than 1.6 million voted in favor of the amendment, accounting for 99% of the estimated vote.
The proposal aims to lower school district property taxes, which account for the lion’s share of a Texas property owner’s property tax bill.
Under the proposal, school districts would get $7.1 billion to reduce their tax rates by replacing local revenues with state dollars, which lawmakers call a “squeeze.” That would reduce the tax rates that school districts use to pay for operating costs like teacher salaries by 10.7 cents for every $100.
The proposal also more than doubles the homeowner exemption from the school district tax, the amount of which a home’s value cannot be taxed to pay for public schools. The constitutional amendment raises the exemption from $40,000 to $100,000.
Together, those breaks — which would apply to the 2023 property tax bill — would be more than $2,500 in tax savings for the typical Texas homeowner over the next two years, with larger savings for seniors, according to the office’s figures. Bettencourt, a Houston-area Republican and the Senate’s top tax supporter. That comes out to a little over $100 a month.
Despite Texas’ reputation as a low-tax state, thanks in large part to a lack of state income taxes, landowners here pay some of the highest property tax bills in the country, according to the Conservative Tax Foundation. Cutting property taxes is a top priority for the state’s top Republicans.
This year, Republicans have an opportunity to make major changes to tax cuts, promising to use a record $33 billion state budget in Texas due to strong economic growth and the largest amount of federal Covid-19 relief funds. . After months of wrangling, GOP lawmakers sent an $18 billion tax cut proposal to Gov. Greg Abbott, but voters still had to sign off on the proposal at the ballot box.
The package also includes $5.3 billion to pay for tax cuts approved by lawmakers in previous years.
Voters approved other tax changes as part of Proposition 4 — including a new cap on how much some businesses’ property values grow each year to help determine an owner’s tax bill.
Owners of commercial, industrial and residential properties – such as rental properties and apartment buildings – that do not receive the homestead exemption and are valued at less than $5 million will now see their value increase by 20% for the next three years. . Previously, businesses had no such cap, unlike homeowners, who under state law could not increase their taxable home values by more than 10%.
Certain commercial property values will expire in 2026 unless lawmakers and voters vote to keep them.
Proposition 4 expands the pool of businesses that do not have to pay the state franchise tax. And the amendment would allow voters in counties with at least 75,000 residents to elect members of the board of directors for their local appraisal district.