House Sends Franchise Tax Cut to Abbott, Defusing Veto Threat

Defusing Gov. Greg Abbott’s first public veto threat, lawmakers sent a bill cutting the business franchise tax to his desk Thursday. The House also sent Abbott a bill plugging holes in the 2014-15 budget.

From left: Texas House Speaker Joe Straus, Gov. Greg Abbott and Lt. Gov. Dan Patrick are shown on May 21, 2015.

Defusing Gov. Greg Abbott’s first public veto threat, lawmakers sent a bill cutting the business franchise tax to his desk Thursday.

In a 133-10 vote, the House concurred with changes made in the Senate to House Bill 32, which costs $2.56 billion over the next two years and includes an across-the-board 25 percent cut in the franchise tax rate paid by businesses.

In February, Abbott said he would veto any budget that didn’t include lower taxes for businesses. The House and Senate passed competing tax cut proposals, both of which included franchise tax rate cuts. Leaders in both chambers eventually agreed to take the House’s version of the franchise tax, rather than the Senate’s, which combined a smaller cut in rates and a provision freeing a large number of businesses from paying any tax at all.

Negotiators from both chambers are in a conference committee to work out differences in the other part of the $3.8 billion tax cut package, an increase in the homestead exemption from $15,000 to $25,000.

The House also voted 145-1 to send to Abbott’s desk House Bill 2, a supplemental budget measure that plugs holes in the 2014-15 budget and shores up the health care plan for retired teachers. The price tag of this year’s supplemental budget is $564.6 million, with $300 million coming from state funds and the rest from federal funds. Before the vote, House Appropriations Chairman John Otto highlighted some changes to the bill made in the Senate, including $87.7 million for the Texas Tomorrow Fund, which locks in year-over-year tuition rates for students who pay up front. The fund has a shortfall of over $500 million, which Otto said he hopes to address more thoroughly next session.

“This is a small portion of what’s necessary, but I applaud the Senate for putting it in there,” Otto said.

The budget also includes $500,000 to Erath County, Otto said. He explained the money was to help defray the county’s costs for hosting the murder trial of “American Sniper” Chris Kyle.