The Texas Legislature and Gov. Greg Abbott have agreed to an $18 billion deal that will provide property tax relief for 5.7 million Texas homeowners. UT Tyler Political Science professor Ken Wink discusses future implications and the financial boon this agreement promises.
Wink also speculates on the future ambitions of key figures in state politics.
MIKE LANDESS: For UT Tyler Radio, I’m Mike Landess. Question: How hard is it to give 5.7 million Texas homeowners a property tax break when the state had $33 million in surplus? Well, apparently a lot harder than most people thought. Now, after a second special session of the legislature, a deal was struck between the House and Senate and an $18 billion deal happened. Here to discuss what the tax cut means, why it took so long, and the long-term political ramifications of the legislative conflict is UT Tyler Political Science professor, Dr. Ken Wink. You can answer all that, right?
KEN WINK: I’ll do my best.
LANDESS: OK, welcome. First, tell us about the tax cut deal that finally passed. Now, that’s about $1,000 savings for homeowners, something like that?
WINK: Probably a little bit more than that, Mike. There are a lot of moving parts here. There are three bills that were actually signed into law and, by the way, these have to go on the ballot because it involves some constitutional change. So, we’ll be voting on those as one or more constitutional amendments in November, before it finally goes into effect.
LANDESS: Give us the broad strokes.
WINK: Sure, sure. Well, basically, there are three or four major parts to Senate Bill 2, which is the major bill. One is that the statewide homestead exemption will be raised from $40,000 to $100,000. So, for instance, let’s say you have a home that’s valued at $300,000. For tax purposes right now, it would be valued at $260,000. But beginning next year, it will be valued at $200,000. So that the part of your base that cannot be taxed will go up. That’s a savings of about $5.3 billion to Texas taxpayers. The other major part of the legislation is that it will reduce the actual property tax rates homeowners have to pay to school districts. I think the cut is 10.7¢ per $100 valuation, which should give taxpayers about a $1,300 per-year break if you have an average home. That’s $12.6 billion of taxpayer savings. Now my question is if the state is willing to be involved in financing a larger percentage of the maintenance and operation budgets of the school districts. That’s a wonderful thing when we’re in a surplus. I’m all for it. But I wonder what will happen 5 or 10 years from now when the surplus is gone. Where is that revenue going to come from at that point in time? I’m not sure.
LANDESS: A question yet to be answered.
WINK: Yet to be answered. There’s also one thing that also needs to be mentioned as well. This is a 2-year plan as I understand it. The House wanted more tax cuts for business than the Senate wanted, so I think they added this in as part of the compromise so that the House would have a take-away as well. But it prevents the taxable value of other residential – in other words, second homes or vacation homes and commercial property where $5 million or less – can only, their appraisals can only go up 20% each year. Now, that’s a lot, but currently there’s no limit on how much the appraisal on those property values can go up. So, this is a 2-year pilot program that is supposed to save additional money for those taxpayers.
LANDESS: So, why did it take so darn long?
WINK: Yeah, well, I think again, I think the House envisioned more of a tax cut, a cut in rates, and they wanted those tax cut rates to apply equally to homeowners and to businesses. That was the speaker’s plan and, by the way, Gov. Abbott was really on board with that plan at the beginning. But the Senate, led by Lt. Gov. (Dan) Patrick, of course, really felt like tax cuts were fine, but there to make sure that homeowners really benefit and that this stays permanent, you should raise the Homestead Exemption. And so there was disagreement over those two things, and I think the governor finally said, “Look fellas, I made a campaign promise; we have to get this through.” And so, a compromise was reached.
LANDESS: But not easily. I mean it’s two special sessions. The first one, they, the House, went home, sent ’em home.
This set up a big battle between Dade Phelan and the lieutenant governor. And this went on for quite a while and, by virtue of the fact that the governor was supporting Dade Phelan, a conflict between the governor and his lieutenant governor.
WINK: That’s right, and so I think personalities may have… You know, I think there were legitimate fiscal and political and economic issues involved. I think egos got involved as well, and so you know this, really, you know you would think that Republicans, particularly after the governor made the promise, could have worked this out in a couple of weeks. But, as we know, egos sometimes get involved, and so it did go on, and it took two special sessions to get it finally passed.
LANDESS: This sets up quite a political scenario for these coming months and coming years actually, and between the governor and lieutenant governor. The governor has been building a huge war chest while all of this was going on. He’s got something like $12 extra million in that war chest just since all of this started happening.
WINK: Right. Yes, I don’t know what his future political plans might be. You know there’s no limit on the number of terms you can run. And in the Texas governorship, we saw that Gov. (Rick) Perry served for, I think, three or four terms. So, Gov. Abbott could conceivably run again. There’s been some speculation in the past that maybe he anticipates running for president at some point in the future. I have not heard anything lately about this year, but you never know what his long-term goals are.
LANDESS: “Long term,” you don’t know what that means for the governor. It’s Dan Patrick that I’m wondering about. And what he’s got his eyes set on.
WINK: Yeah, I just don’t know. You know, I’m not, don’t have any really inside information on that, but certainly it’s not unusual. We’ve seen this throughout Texas history that once you win one statewide office, it can be a springboard to something else. And so there are many paths to governorship. Sometimes attorney general, sometimes lieutenant governor, sometimes U.S. House member. But certainly there’s some room for Lt. Gov. Patrick if he wants to move up.
LANDESS: In terms of the governor and his future political plans, why wouldn’t he look at Ted Cruz’s seat as a for instance?
WINK: Well, that that would not be a bad thing to look at. I don’t know what the relationship is between those, those two individuals. But yes, that’s a very astute point. Oftentimes, being governor for a term or two can be a springboard to people who want to run for U.S. Senate. But of course, you know, serving in Austin is quite a bit different from serving in Washington as well, and sometimes people are suited for one of those venues or the other, and they don’t really care to make the jump. So I don’t know if the governor wants to be in Washington D.C. or not.
LANDESS: Our guest has been UT Tyler Political Science professor, Dr. Ken Wink. To hear this conversation again or to share it, go to KVUT.org. For UT Tyler Radio, I’m Mike Landess.
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