The Texas Senate moved ahead with promised tax cuts Wednesday by approving a package of bills to provide $4.6 billion in tax relief.
However, there are differing opinions in the House regarding where the tax relief should come from and who would benefit.
The package approved by the Senate on Wednesday includes more than $2.1 billion in property tax cuts, via increased homestead exemptions, which would save the average homeowner $200 a year. The franchise tax was cut 15 percent, which represents $1.4 billion in savings for businesses. More businesses also were exempted from the tax by another bill.
State Sen. Kevin Eltife, R-Tyler, was the lone Republican to vote against increasing the homestead exemption. Eltife did vote for bills related to the franchise tax, saying he has never supported the tax.
Eltife said the state has too many needs to address, including $7.5 billion in unfunded pension liabilities and $3 billion needed for roads, to support increasing the homestead exemption at this point in the budget process.
"I'm just concerned it won't provide real tax relief for everyday Texans," he said. "Over the next few years, I think the net effect will be minimal and I think it creates a false hope among taxpayers that they're going to see a big reduction in their tax bill when they won't."
Smith County's nine school districts would take a $2.35 million hit to revenues received from the state under the proposal, Smith County Appraisal District Chief Appraiser Mike Barnett said. Tyler Independent School District would see the biggest impact, receiving almost $1.4 million less from the state if the bill becomes law.
TISD spokeswoman Dawn Parnell said the district did not have enough information regarding the legislation to comment.
"This is the easiest, best mechanism," said Republican state Sen. Jane Nelson, who chairs the powerful Senate Finance Committee. "And quite honestly, if homeowners have money back in their pockets, they're going to use it in a way that's positively going to impact everybody."
Texas' last big tax cut came in 2006, when school district taxes were trimmed by $7 billion. But the relief was short-lived: Most homeowners saw a dip in their bills the following year, only to see their appraisals start rising again.
Abbott made tax cuts a top priority going into the session and has said he wouldn't sign a budget bill that didn't have significant tax relief within it.
Years of booming oil and gas exploration left the state flush with unexpected revenue when the session began in January. Next week, the House is set to approve a new two-year budget that leaves more than $8 billion in unspent dollars on the table.
But how the House greets the Senate's tax package is more uncertain. Some House Republicans have publicly taken a wait-and-see approach to it, while espousing a tougher view on the impact of property tax cuts. Whether homeowners would really feel relief on fast-rising property tax bills has some in the House mulling a cut in the sales tax instead.
The Associated Press contributed to this report.