Multi-billion tax relief package rolled out Tuesday at the State Capitol

A multi- billion dollar tax relief package was rolled out Tuesday at the state capitol. The plan includes tax cuts for homeowners and for businesses. The plan is part of a bi- partisan effort- and is in direct response to the governor's threat that he would veto any budget that did not have tax relief.

Previous attempts at property tax relief by state lawmakers have not fared very well but now Lt. Governor Dan Patrick believes they've got it right with Senate Bill 1.

"And it's been long, long overdue and the people have spoken clearly this is what they want," said Lt. Gov. Patrick.

Expanding the homestead exemption to 25 percent of the median market value of a house in Texas is a key part of the $4.6 billion tax relief plan announced Tuesday. The idea, according to Senate Finance Committee Chairperson, Jane Nelson  (R) Flower Mound, is to make the tax break flexible to address annual appraisal rate hikes.

Here's how it would work:

In 2016, the median market value for a home is projected to be $134,500. The exemption would total $33,625, according to data provided by Senator Nelson's office. As the home value increases, a year later, to nearly $144,000, the exemption would go up to almost $36,000. On average, it's estimated the annual tax break for a typical home would be just under $300.

Part of the tax cut would require a public vote. The measure could be on a ballot for a statewide vote by this fall.

"In addition, SJR 1 will constitutionally prohibit the establishment of any tax on the sale of Real Estate and that's intended obviously to prevent future Texans from being priced out of Home ownership," said Senator Nelson.

The tax plan also includes SB7, which provides $1.5 billion in relief for businesses. The state franchise tax rate, also known as the margins tax, would be reduced by 15 percent.

On top of that, SB8 would increase the exemption cap from the franchise tax to $4 million. Its estimated 61,000 small businesses would no longer pay the tax.

After Governor Greg Abbott restated his budget busting promise to this gathering of road builders and was later asked if the Senate plan would keep his veto pen in his desk.

"The way I see it, for both the Senate and the House and my proposals, we are very close, and so it is just a matter of coming together, working out any differences that we have and looks like we are going to be able to ensure the people of the state of Texas meaningful tax relief," said Governor Abbott.

A growing economy and tapping into $7 billion not spent in the last budget could pay for the plan.

"Also a lot of the money that looks like it is available is really in these dedicated accounts, fees collected for a certain purpose, that haven't been spent for what the tax payers thought they were paying for," said Political Analyst Dick Lavine.

The use of what could be considered one time money is why Lavine worriers the tax plan could backfire.

"If all these go through we will be coming back with a lot less revenue to put into and make our schools better, making our roads better and investing in our colleges and universities," said Lavine.

In a statement sent to FOX7, State Senator Kirk Watson (D) Austin noted the homestead exemption relief plan is similar to one he floated during the previous session.

"I take satisfaction knowing that the foundation of the Senate's multi-billion dollar tax package is a progressive idea that will help folks who need it most. And I'm proud that my efforts have helped get us to the point of providing homeowners a meaningful property tax break," wrote Senator Watson.

While Watson supports that property tax break, he also indicated lawmakers should come up with a new education funding plan before cutting the franchise tax.

Officials at the Texas Democratic Party also issued a statement Tuesday day. Executive Director Crystal Perkins expressed doubt about the tax plan and argued the plan "may place an undue burden on middle-class Texas families."