Homeowners in the Austin school district could see a $122 annual cut in property taxes if voters statewide approve Proposition 1 on the Nov. 3 ballot.
The election to create a state constitutional amendment would increase the residence homestead exemption for public school purposes from $15,000 to $25,000. The update, if approved, would mark the first change to the exemption since it was raised in 1997 from $5,000 to $15,000. Statewide, the average savings would be about $126, according to the Texas Legislative Council, which provides nonpartisan support to the Legislature.
Early voting begins Monday.
State Sen. Jane Nelson, a Republican from Flower Mound and chairwoman of the Senate Finance Committee, told the American-Statesman this week that the bump is long overdue.
“Homeowners need a break,” Nelson said. “The state is providing the relief, so the state needs to cover the costs.”
Cutting property taxes was a priority of many GOP leaders, notably Lt. Gov. Dan Patrick, who presides over the Senate.
Voters across the state are likely to approve the proposition, but Austin voters might be especially motivated to vote in favor. The owner of a median-valued home in Austin would otherwise see a $242 increase on their 2015 bills.
The proposition also would prevent other taxing entities from cutting other exemptions. Across the state, many cities, counties and other property tax collectors offer exemptions of at least $5,000 or 20 percent of a home’s value.
In Austin, there is a $70,000 exemption for elderly and disabled people and a 6 percent regular exemption for owner-occupied homes. Travis County also has exemptions.
Currently, about 60 percent of Texans’ property taxes go to public education. But even if Proposition 1 amends the state constitution, nothing will change for school funding, said Eva DeLuna Castro, a budget analyst for the Center for Public Policy Priorities.
The state will make up the difference — about $650 million a year — with money that was already allocated, she said.
The Center for Public Policy Priorities, an Austin-based nonprofit that advocates for low- and middle-income Texans, supports Proposition 1.
While the group all along favored raising the exemption by a flat amount to offer more relief to poor Texans, it unsuccessfully argued that the Legislature first should restore pre-recession funding to schools and other services before cutting taxes.
“Before you cut taxes, we should get back to, at least, what we used to spend” before 2008, Castro said.
The homestead exemption boost was part of a $3.8 billion compromise tax cut package that also cuts the business franchise or “margins tax” by 25 percent.
State Sen. Kevin Eltife, a retiring Republican from Tyler, was the only lawmaker in his party to oppose the homestead exemption change.
“I think we need meaningful property tax relief,” he told the Statesman, adding that homeowners won’t see a significant benefit if Proposition 1 passes because of the relatively small boost and rising property values that will largely negate the higher exemption. “I am afraid they are going to be disappointed,” he said.
The key to more significant property tax relief is to find a new stream of revenue for public education, such as sales taxes or real estate transfer taxes, he said.
The homestead exemption increase will provide only slight property tax relief for homeowners and won’t help renters.
The homestead exemption increase is long overdue, and the proposition will provide meaningful relief to the property taxes paid by homeowners.
For those lacking acceptable photo identification — a valid driver’s or concealed handgun license, passport or passport card, military or Texas personal identification card, or U.S. citizenship or naturalization certificate — Election Identification Certificates are available from Texas driver’s license offices. Visit www.dps.texas.gov for locations and more information.