Governor Greg Abbott set the stage in his State of the State speech that he would veto any budget that didn’t include business tax cuts.
Table 1 shows the tax cut packages that dominated the discussion throughout much of the legislative session. The Senate’s initial package of $4.63 billion included business franchise tax and property tax relief. The House’s plan consisted of $4.9 billion with franchise tax and sales tax cuts.
Table 1: Historic Tax Relief Discussion During the 2015 Texas Legislative Session Ends with $4 Billion in Tax and Fee Relief
With the leadership in the Texas Senate and House, the final package adds up to a historic $4 billion in tax and fee relief that includes:
- Franchise tax cuts for a value of $2.6 billion:
- Permanent reduction in both franchise tax rates by 25 percent, and
- Increase in the cap to file the EZ form from $10 million to $20 million at a lower 0.331 percent tax rate.
- Property tax relief for a value of $1.2 billion:
- Pending voters’ approval of permanently raising the $15,000 homestead exemption for school property taxes by $10,000 in November, and
- Safeguarding against rising property taxes, local governing bodies will now be required to have a 60 percent super majority vote to pass any property tax rate increase above the effective rate.
- Fee reductions and elimination for a value of $200 million:
- Includes a number of fees that are either reduced or eliminated that will decrease the reliance on dedicated accounts for certification of the state budget.
This total package is in the range we recommended early during the session and we applaud the work by the leadership and the Legislature for making this goal a reality.
It all started with leadership discussing how much taxpayer dollars to return to Texans where it belongs relative to how much more they can spend.
With the work of the 15 conservative member organizations of the Conservative Texas Budget Coalition, including the Texas Public Policy Foundation, and the good stewards of taxpayer dollars in the Legislature, this process worked well to provide a conservative budget below population growth plus inflation and provide large tax and fee cuts.
This is a winning combination for Texans this time around and hopefully in the future.