By J. Lyn Carl, GalleryWatch.com
Austin, TX –
Residential homestead exemptions would increase by $7,500 to a total of $22,500 under the provisions of legislation approved in the Texas Senate today. SJR 13 by Sen. Steve Ogden (R-Bryan) provides for a constitutional amendment that would allow Texas voters to decide the fate of the increase in the exemption. However, more importantly, Ogden described the legislation as "part of the negotiations with the House on HB 3," the property tax relief bill.
The tax bill is stalled in conference committee as time is starting to run out on the First Called Session that ends at midnight Wednesday.
Sen. Gonzalo Barrientos (D-Austin) offered an amendment to SJR 13 that would have increased the exemption by $15,000 instead of $7,500.
"The majority of Texans are waiting for this tax break," he said. "We are the lobbyists for the average Texans - the majority who want that tax break."
"This is Monday, and this session is over on Wednesday," Ogden warned fellow members of the Senate. "A vote for adopting this amendment is tantamount to a vote against raising the homestead exemption during this special session." He said an increase of $15,000 in the exemption would cost $1 billion. "It is a piece of the puzzle on the overall tax bill," Ogden said of his legislation, "and $15,000 won't fit that puzzle."
Ogden noted that SJR 13 would equate to a 5 percent property tax cut if approved by voters. He said if the issue were to pass, it would be presented to Texas voters in a Nov. 8 election and if approved by voters, would go into effect during the second year of the upcoming biennium.
On questioning by Sen. Eliot Shapleigh (D-El Paso), Ogden said the legislation provides "real relief" and the only more broadly based tax relief would be an across-the-board tax cut.
Noting that for a house in the $40,000 value range, the increased homestead exemption would mean 55 percent of the value of the property would be exempted from taxation. However, on a home valued at $100,000, the amount exempt from taxation would be only 5 percent.
"So this is a more broadly based and fair tax cut, right?" asked Shapleigh.
"This type of homestead exemption is more beneficial to lower-income Texans and more beneficial to modestly priced houses than simple across-the-board tax cuts," responded Ogden.
"If this is the preferred method of tax relief, then why don't we use this as the major vehicle of the (tax) bill?"
"There is a balance here," said Ogden, calling the $7,500 property tax exemption increase "appropriate." He said what is most fair is a "broad-based tax that is equitably distributed." Ogden told Shapleigh he believes the sales tax is more equitable than does Shapleigh. He also noted that the franchise tax needs to be more broadly based than what came out in the House and Senate versions of the tax bill, but added that closing business tax loopholes will be a good first step toward ensuring that business pays more of its fair share of taxes.
"This SJR is being offered in the Senate as a piece of the solution on HB 3, which would cut property taxes and raise substantial new revenue through changes in sales and franchise tax," reiterated Ogden.
Barrientos had argued that because the homestead exemption would offset the "regressive nature" of both the sales and property tax, perhaps the exemption should be even higher to be fair to more people in Texas.
The $7,500 increase in the exemption represents a $500 million tax cut, said Ogden, which equates to one-quarter cent increase in sales tax, if comparisons of the two are made. "It might be popular," he said of attempts to further increase the homestead exemption, "but I'm just not sure how we could pay for it."
Barrientos' amendment to further increase the homestead exemption that would be of particular importance to low to middle income Texans was tabled, with the SJR passing from the Senate by a 29-0 vote.