WEEK IN REVIEW

HOUSE, SENATE REACH DEAL ON TAX CUTS

(AUSTIN) — Chairmen of key committees in the House and Senate announced that the two chambers have come to consensus on how to deliver billions in property and business tax relief over the next two years. Monday, the Senate Local Government and the House Ways & Means Committees took up and passed bills from the opposite chambers that would raise the amount of money homeowners can deduct from their local school property tax bills and the amount that owners can write off for business personal property taxes. “We’ve got home and business property tax relief on the way at the Texas Legislature, and that’s a happy day,” said Local Government Committee chair and Houston Senator Paul Bettencourt.

On the House side, Ways & Means Committee chair and Dallas Representative Morgan Meyer said his committee would pass SB 4 as it came into the House. That bill increases the homestead exemption for all homeowners up to $140,000, with senior and disabled homeowners qualifying for an additional $60,000. In passing the bill out of the Senate, Bettencourt said this will mean that a supermajority of over-65 homeowners will pay no maintenance and operation school property taxes. The Senate committee moved HB 9, which was changed from the version passed out of the House. It is also significantly different from the version approved by the Senate, SB 32. That bill would’ve raised the exemption on business personal property from $2,500 to $25,000 and would’ve given owners a tax credit of up to twenty percent of inventory to apply against their franchise tax bill. The original House plan would’ve upped the business personal property exemption to a quarter-million dollars, but after negotiations, lawmakers settled on a bill that would raise the personal property exemption to $125,000 and removed the inventory tax credit. Both bills were voted out of committee.

Wednesday, the Senate Finance Committee took up a bill that would create a dedicated funding stream to pay for water projects to meet the needs of Texas’ growing population through 2075. The framework for that plan already passed the Senate in the form of SB 7, which puts the Texas Water Development Board in charge of evaluating and approving projects for state financing. HJR 7, by Palestine Representative Cody Harris and sponsored by SB 7 author and Lubbock Senator Charles Perry, would ask voters to approve a constitutional amendment directing $1 billion in sales tax revenue into the water fund every year. The major difference in the version considered by the Senate and passed out of the House is how the money will be allocated. The House version left the decision on what kinds of projects to pay for up to the TWDB, but the Senate proposal would require that 80 percent of funds go towards developing new water supply.

There has been debate over how much money should go to repair leaky infrastructure, which wastes billions of gallons of water every year, and how much into new supply programs like reservoirs, desalination plants, and aquifer storage and recovery. For Perry, the answer is clear. “If we could stop all leaks today, it produces 463,000 acre-feet,” he said. “That’s less than six percent of the total water supply needs – and it’s not actually increasing supply, it’s just extending existing supply.” He said the state looks to be short about six million acre feet – almost half of the annual water usage in Texas today – by 2050. Given the timescales involved in water projects and the short-term outlook that dominates legislative budget cycle, Perry worries that unless the balance between the two categories is laid out and protected in the state constitution, future legislatures might become impatient and try and move that money to other sources. “In sixteen years, I anticipate, based on conversations with regional river authorities and other water provider groups, there will be significant movement and some “wins”, if you will, on actual supply, but it won’t happen in eight years,” said Perry. “I want to give it the time to come to maturity.”

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