This morning, Lt. Governor Patrick, along with Sen. Nelson
and Sen. Schwertner, unveiled the initial Senate proposal that would provide up
to $4.6 billion in tax relief to both Texas homeowners and businesses. This
package provides a homestead exemption (school district tax rates only) that
would be based on 25% of the state's home median market value, a decrease to
the state’s franchise tax by 15%, and it would increase those businesses exempt
from the franchise tax from $1 million to $4 million in total revenue.
SB 1 by Sen. Nelson will be the Senate’s vehicle for
the school district homestead exemption. The homestead exemption has a
price tag of about $2.5 billion for the biennium. At the press conference, Sen.
Nelson stated that that a constitutional amendment is required (SJR 1), which
she hopes will be on the ballot on September 12 so that tax relief and the hold
harmless funding needed for districts can flow during the 2015-16 school
Sen. Nelson explained that the new indexed exemption is
based on 25% of the state’s home median market value. In 2015, the Comptroller
estimated the median market value for a home at $134,500, which would provide a
$33,625 homestead exemption (current law is $15,000). In 2016, the median
price is estimated at $143,915, which would provide a $35,979 exemption.
SB 1 contains the following provisions:
1. LBB shall determine state’s home median market
value as of September 30 for 2015 and in all future years by July 25 and post
in the Texas Register.
2. Districts that adopted local optional homestead
exemptions for 2014 tax year may not reduce or repeal local exemption until
after December 31, 2024.
3. Provides for tax relief for those receiving 65 and
4. School districts must adopt tax rates for the 2015
tax year before the later of October 31 or the 60th day after the date of
the certified roll is received by the taxing unit.
5. Provides for both M&O and I&S school
district hold harmless funding through the Comptroller’s Property Value Study.
A special I&S hold harmless provision applies to districts that do not
receive EDA and/or IFA funding under Chapter 46. Hold harmless funding
only applies to the tax rates adopted in the 2014 tax year.
6. SJR 1 would also prohibit any tax on real estate
MCA will continue to analyze the language in this bill and
we will provide more details as soon as possible. Our first reading
indicates that there could be some timing issues with the current provisions as
SB 7 by Sen. Nelson provides $1.5 billion for the
biennium in franchise tax relief by reducing the current franchise tax rate by
15% on a permanent basis.
SB 8 by Sen. Schwertner would exempt business from the
franchise tax that have $4 million or less in total revenue. At $760
million for the biennium, approximately 61,000 small business would be exempt,
or 52% of all business entities.
Next week the Senate Finance Committee will begin hearing
these tax relief bills, along with many other tax relief bills filed by the
Senators. Stay tuned.
SB 1 bill text: http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=84R&Bill=SB1
SB 7 bill text: http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=84R&Bill=SB7
SB 8 bill text: http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=84R&Bill=SB8