Gov. Greg Abbott declined to take sides Wednesday in an ongoing spat between the Texas House and Senate over whether to cut property or sales taxes, but said he expected the Legislature to settle on a mix of cuts totaling “$4 billion or more” by the end of the legislative session June 1.
At a Tax Day news conference, held in conjunction with the deadline to file federal income tax returns, Abbott reiterated a previous threat to veto any state budget that doesn’t significantly reduce the state’s business franchise tax and also called on state lawmakers to set a goal of eventually eliminating that much criticized levy, also known as the margins tax.
His message provides little insight for House and Senate GOP leaders, who disagree about which other taxes to cut.
Both chambers are pushing $4 billion-plus tax cut packages that include major reductions to the franchise tax but dedicate about half of the cuts to either reducing the 6.25-percent state sales tax in the House or school property taxes in the Senate.
In recent weeks, Lt. Gov. Dan Patrick, who presides over the Senate, and state Rep. Dennis Bonnen, R-Angleton, the House’s lead tax policy writer, have traded public barbs over which plan is superior.
Neither of them would save Texans that much: The Senate’s plan would reduce the average homeowner’s property tax bill by more than $200 per year; the House’s version would save the average family of four $172 per year, whether it rents or owns a home.
Abbott has vowed more than once to veto any state budget that doesn’t include business tax cuts — most recently in his February State of the State speech, in which he also said he would “insist” on property tax cuts.
But he backed away from that statement somewhat Wednesday, saying he would like to cut property taxes but that reductions to both property taxes and the sales taxes are up for discussion.
“There is the possibility of property tax reduction; there is the possibility of sales tax reduction on top of the margins tax reduction,” Abbott said at a news conference at the headquarters of a small North Austin business whose president and CEO spoke against the franchise tax.
Patrick, who campaigned on property tax cuts, pointed out Wednesday — as he has before — that Abbott has called for property tax cuts and said they “continue to stand shoulder-to-shoulder.”
“Let there be no misunderstanding, I agree with Governor Abbott that I too will not support any budget that does not have franchise tax relief,” Patrick said in a statement. “I also will not support any budget that does not have property tax relief as well.”
Bonnen said he also is in accordance with Abbott, but stopped short of drawing a line in the sand.
“I appreciate Governor Abbott’s leadership on cutting taxes, and agree with his goal to pass tax relief that generates economic activity and job creation,” he said in a statement. “My plan provides a tax cut for every Texan, including every employer, which is why it has widespread support from business leaders.”
Asked by reporters Wednesday if his veto threat extended to property taxes, Abbott said, “The only veto declaration I’ve made clear is I will veto any budget that does not include the margins tax.”
That business tax currently generates about $10 billion for the state over the two-year budget cycle, which is about 10 percent of the state’s general revenue budget.
“With regard to the veto word, I don’t want to go throwing that out there loosely,” Abbott said. “I’ve thrown down my one veto threat. I’ll leave it at that right now.”
Political observers said Abbott’s strategy is sensible and expected, particularly for a first-term governor.
“It makes all the sense for the governor to let the House and Senate fight over the particulars — even if they are big particulars,” said Jim Henson, director of the Texas Politics Project at the University of Texas. “If you’re the governor and you know that both houses are talking about at least a big overall number of tax cuts, why get involved in the to and fro, which is always pretty pronounced?”
Henson said he expects Abbott will sign whatever tax cut package comes to his desk, which is almost sure to include franchise tax cuts. And if it’s not what Republican voters want, Abbott won’t “be the one to suffer,” he said.