HOUSTON – Texas voters signed off on a massive tax-cut package in the Nov. 7 constitutional amendment election.
Proposition 4 will allow the state to spend $18 billion on property tax cuts for homeowners and businesses, cut school districts’ tax rates and enact other tax changes.
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The entire property tax-cut package is $18 billion altogether, but it includes $5.3 billion in cuts lawmakers approved in prior years. If voters approve the constitutional amendment, the state will send $12.7 billion to school districts so they could pay for new cuts to their property tax collections, which make up the bulk of landowners’ property tax bills. Of that, $5.6 billion will go toward more than doubling Texas’ main tax break for homeowners — the state’s homestead exemption on school district taxes, or the chunk of a home’s value that can’t be taxed to pay for public schools. The constitutional amendment would raise the exemption from $40,000 to $100,000.
The rest of that money — some $7.1 billion — will go toward paying school districts to lower their tax rates by replacing local property tax dollars with state sales tax revenue, a tax-cut method lawmakers refer to as “compression.” Doing that will lower the tax rate school districts use to pay for operating costs, like teacher salaries, by 10.7 cents per every $100 of property value.
Together, those measures will translate to major tax savings for Texas homeowners, proponents argue.
The proposition will also exempt more businesses from having to pay the state’s franchise tax. The amendment will also allow voters to handpick three members to serve on their local appraisal district’s board of directors. Currently, people are appointed to those posts.
The Texas Tribune contributed to this article.