Nelson Emphasizes Property Tax Relief in Senate Base Budget

Senate Finance Chairwoman Jane Nelson presented a $205.1 billion two-year base budget Tuesday morning, vowing to provide property tax cuts that Texans “actually feel” while keeping the state’s economy humming along.

The Senate budget is $3 billion larger than the $202.4 billion House budget that Speaker Joe Straus released nearly two weeks ago. However, the Senate budget includes $4 billion allocated for tax cuts. Straus opted to leave tax cuts out of the House’s opening proposal to allow members to formulate their own ideas on how to cut taxes.

At a Tuesday news conference, Nelson said that the Senate budget plan includes $3 billion set aside for “meaningful” property tax relief that homeowners would notice, as well as $1 billion for business franchise tax cuts. She and Lt. Gov. Dan Patrick said the mechanisms by which they intend to cut property and margins taxes were still being worked out and could end up higher than the $4 billion currently proposed.

“We are taking in substantial revenue, and we have an obligation to return a large share of those dollars to the people who have worked hard and earned that in the first place,” Nelson said.

Both budgets fund public school enrollment growth, expected to be about 84,000 students annually. The Senate budget technically puts more than $1 billion more into public education to cover the costs to local budgets of it its tax cuts. However, House leaders said their budget would provide a bigger boost to school districts by taking advantage of rising property values.

While the ongoing school finance lawsuit has prompted some lawmakers to argue against any major changes to school finance funding this session, several Straus lieutenants have said the issue can't wait.

"I think what you can take from this conversation is that the House is not considering itself paralyzed when it comes to the funding of schools,” state Rep. John Zerwas, R-Richmond, said Tuesday at a panel discussion hosted by the Conservative Roundtable of Texas.

The Senate budget would add $815 million for border security, more than the previous seven years combined, according to Nelson's office. The House budget allocates $396.8 million for border security, which House officials described as enough to maintain the increased presence of DPS officers that were sent to the border in June as part of a high-profile border surge. The Senate's extra funding includes $283 million to establish a Border Security Division in the Department of Public Safety, and money for new training grounds and a "Special Weapons and Tactics" team.

Like the House budget, the proposed Senate budget ends $1.2 billion in spending that currently is paid out of the gas tax but is not directly related to transportation. Most of that money currently goes toward funding the Department of Public Safety. For years, lawmakers have discussed ending those so-called diversions from the gas tax. Nelson’s budget also includes a one-time dedication of $1.2 billion in sales taxes collected on motor vehicle sales to the highway fund. Lawmakers are expected to consider permanently dedicating that revenue stream to road construction, an idea that Nelson indicated she is open to.

The Texas Ethics Commission, which has drawn attention lately for its legal battles with a prominent conservative activist, sees a dramatic funding cut under the Senate budget. While the House funds the agency at $7.2 million, close to its current level, the Senate cuts it to $4.7 million.

“This budget does not fund the public integrity unit anywhere. ... I personally do not believe it belongs in Travis County,” Nelson said.

Nelson’s budget also defunds the Texas Racing Commission, which has been under fire in recent months for its decision to move forward with plans to permit for a controversial form of gambling known as historical racing at the state’s racetracks despite objections from many lawmakers. Nelson said the commission should have waited for the Legislature to convene and debate the issue. The commission’s funding would not be restored “until we have an agreement on that,” she said.

Patrick praised Nelson for the budget she had crafted.

“The budget has been a collaborative effort between the lieutenant governor’s office and her office, but she’s done 99 percent of the work,” Patrick said.

To maintain the state's current level of services, lawmakers will need to increase general revenue, the portion of the budget over which lawmakers have the most control, from $95 billion in the current budget to $101 billion, according to a recent analysis by the liberal Center for Public Policy Priorities. Looking at the base budgets, CPPP budget analyst Eva Deluna-Castro said the Senate budget is further behind, spending $96.2 billion in general revenue to maintain current services, compared to the House budget, which spends $97.6 billion to maintain current services.

Eva Hershaw and Ryan McCrimmon contributed to this report.