AUSTIN, Texas — Homeowners and business owners are one step closer to seeing relief on their property taxes after both the Texas House and Senate passed long-awaited property tax relief legislation that's on its way to the governor's desk.
The deal is worth $18 billion and the money is coming from the state's $34 billion budget surplus.
Some Texas Democrats said they've been wanting to see these measures for years. The package includes benefits for both homeowners and businesses, but some lawmakers are worried it won't have a significant impact on renters, who make up around 40% of Texans.
Under the legislation, the state would send money to school districts throughout Texas to help lower tax rates. It also raises the homestead exemption from $40,000 to $100,000, so long as voters give it the green light.
“We’re giving back the people’s money, so we need the people to say yes," said Houston Republican Sen. Paul Bettencourt.
Bettencourt authored the bills. He said the average homeowner will save nearly $1,400 per year and nearly $1,500 for seniors.
“Not only do they get a whopping 44% reduction in their tax bill like that this year, they’re gonna see that tax reduction continue every year after that. So, it’s a great thing for over 65 taxpayers," Bettencourt said.
Additionally, around 67,000 more small businesses will be exempt from franchise taxes. There's also a temporary 20% cap on appraisal increases for non-homestead properties that are valued at $5 million or lower.
“That’s for everyone who might have a second house where there’s no cap at all, or they have rental property, rental homes that they rent out, or they have business property that goes up more than 20% in a given year," said Lt. Gov. Dan Patrick.
The bills don't, however, include any direct relief for renters. Patrick and Bettencourt said they hope landlords will pass their tax savings on to their tenants in the competitive market. Not everyone agrees with that thinking.
"We know that's not going to happen," said Houston Democrat Rep. Gene Wu.
Wu was one of the few who voted against the package in the House. He had introduced an amendment that failed to be adopted which would have provided direct relief to renters, who make up 84% of his district in southwest Houston.
“For most people in my district, in other places in Houston, who’s renting about $1,000 or under, they would have gotten like a month, month and a half’s rent free," Wu said.
Democrats also tried and failed to add teacher pay raises and more school funding to these tax bills.
Texas voters will still need to give final approval to these tax cuts on the ballot in November. If approved, Texans would see the benefits on their 2023 taxes.