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Texas Senate Approves Property Tax Cut

Texas senate
Texas senate approves property tax cuts. (Photo: Texas Tribune)

The Texas Senate has unanimously approved a property tax cut agenda, which proposes tax cuts for homeowners and business owners and will funnel billions of state dollars into public schools.

Texas senate

Texas senate approves property tax cuts. (Photo: Texas Tribune)

Bringing Down Property Taxes

Lt. Gov. Dan Patrick’s $16.5 billion package comprises three priority bills that aim to bring down property taxes with a historic state surplus of $33 billion. Senate Bill 3 proposes an increase in the state’s homestead exemption for school districts.

It will raise the value of a home that can’t be taxed from $40,000 to $70,000 with an additional $20,000 for seniors. It will save a homeowner who pays the state’s average school tax rate an extra $341 and seniors an additional $227 each year, according to a published article in Texas Tribune.

The bill has been popular among senators, and Democrats have joined Republicans to pass all three bills. Senate Bill 4 proposes the requirement of the state to direct at least $5.38 billion into public schools, which would cut school property tax rates by 7 cents per every $100 in property value.

READ ALSO: Texas Lawmakers Unveils ‘Largest Property Tax Cut’

What Will Happen if SB 4 Becomes a Law?

The bill has amended the 2019 landmark school finance law and will be presented as a proposed constitutional amendment to voters. The package will lower property-wealthy districts’ payments through the recapture program, which requires those districts to give any tax surplus it collects to the state so that it can go to “property-poor” districts that cannot raise all the money they need through taxes.

Despite skepticism among Senate Democrats that the state may have to raise sales taxes to cover the potential shortfall in the future, no Democrat has voted against the bill. Austin Independent School District paid the state close to $800 million in the last fiscal year due to ballooning recapture payments.

In a published article in FOX 26 Houston,  if SB 4 were to become law, the district would have to lower the rate it uses to tax property owners for its maintenance and operations, and the state would cover the district’s shortfall. The only concern is that lawmakers will have little left from the surplus to increase the state funds districts receive after the property tax compression.

The basic allotment has not increased since 2019, when lawmakers overhauled the school finance system. The bill will expand school district inequities by benefiting businesses and the highest-earning Texans while providing no new dollars for school districts, said Chandra Villanueva, director of policy and advocacy for the progressive think tank Every Texan.

READ ALSO: Texas Rent Relief Program Reopens, Application Starts This Month

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