AUSTIN (Texas Tribune) – Gov. Greg Abbott has signed an $18 billion tax cut for Texas property owners, sending the proposals to voters for their approval later this year.

The package puts $12.6 billion of the state’s historic budget surplus toward making cuts to school taxes for all property owners, dropping property taxes an average of more than 40% for some 5.7 million Texas homeowners and offering brand-new tax savings for smaller businesses and other commercial and nonhomesteaded properties.

On Saturday, Abbott added his signature to Senate Bill 2, the property tax cuts bill, and Senate Bill 3, a franchise tax relief bill, which were passed by Texas lawmakers two weeks ago after months of negotiations between the state’s top Republicans.

A third measure, House Joint Resolution 2, will go before voters in a constitutional election in November. Voters would need to approve the package for the cuts to take effect this year.

At a time when the state has some of the nation’s highest property taxes and lawmakers face massive political pressure to ease the financial suffering of their constituents, the initiative was a cornerstone of Abbott’s 2022 reelection campaign and that of most state lawmakers.

The package’s marquee item is a $5.3 billion expansion of the state’s homestead exemption, the amount of a home’s value that can’t be taxed to pay for public schools, from $40,000 to $100,000. The new exemption combined with school tax cuts would save homesteaders — Texans who live in a residence they own — an average of $1,300 a year in property taxes, said state Sen. Paul Bettencourt, R-Houston, who sponsored the package of legislation in the Senate.

It also offers additional cuts for seniors and property owners with disabilities, averaging about $170 more in savings per year, Bettencourt said.

The most novel part of the plan, an idea introduced publicly for the first time on Monday, is a first-ever temporary 20% cap on appraisal increases for properties valued at $5 million or lower that aren’t considered homesteads. Those would include second homes, vacation properties, rental houses or commercial retail or business properties.

Including more than $5 billion approved four years ago, the legislation also allocates nearly $12.6 billion to reduce the school property tax rate by 10.7 cents per $100 valuation for all homeowners and business properties.

Those billions are being sent to school districts so they can cut their taxes for all property owners and shift a portion of their maintenance and operations costs to the state. But the package would give no new funding to schools, a sticking point with critics who note that, compared to other states’ spending, Texas is ranked near the bottom in per-student funding for education.

Targeted tax relief for the state’s 3.7 million renter households has been left out of proposals that have passed both chambers.

House Democrats unsuccessfully tried to push their own versions of tax relief, including a tax-cut package sponsored by Dallas state Rep. John Bryant that would’ve given tenants a cash refund equaling up to 10% of the rent they paid the previous year. It also would have made the homestead exemption $200,000, doubling the exemption in the current bill, and would have included a teacher pay raise and added more school funding.