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Voters will have final say on billions of tax cuts for Texas homeowners, businesses
Voters will have final say on billions of tax cuts for Texas homeowners, businesses

Yahoo

time5 days ago

  • Business
  • Yahoo

Voters will have final say on billions of tax cuts for Texas homeowners, businesses

Voters will be asked to approve property tax cuts for Texas homeowners and businesses in November. If voters agree, homeowners will see increased breaks on the taxes they pay toward school districts, with those above the age of 65 or living with disabilities seeing even bigger cuts, if Texas voters approve them in November. Business owners will get help, too, on the taxes they pay on their inventory. Gov. Greg Abbott, a champion of tax cuts, said Friday he plans to sign the deal, one more procedural step before the fall election. Abbott urged voters to approve the increases. 'Never before has the Texas Legislature allocated more funds to provide property tax relief than they did this session,' Abbott said in a news release. Texas lawmakers plan to put $51 billion toward cutting property tax cuts — maintaining ones enacted in previous years as well as enacting new ones — over the next two years. That's a gargantuan figure, state budget analysts and some lawmakers worry will come back to haunt the state. Legislators tapped once-in-a-lifetime multibillion-dollar budget surpluses, the result of inflation and massive influxes of federal stimulus dollars during the COVID-19 pandemic, to pay for tax cuts in recent years. Those federal dollars are all but spent. Though Texas' economy is healthy, it has slowed. Uncertainty around the Trump administration's back-and-forth tariff policies, lower levels of immigration, lower oil prices and federal spending cuts could make matters worse for the state's economy, the Federal Reserve Bank of Dallas said in May. The state budget, which lawmakers approve every two years, could take a hit as a result, said Shannon Halbrook, a fiscal policy expert at the left-leaning Every Texan. Tax cuts may not be on the chopping block, but other government services would be. 'I don't think we're going to have a lot of extra money lying around next time,' Halbrook said. 'The conversation is not going to be, 'how do we spend all this extra revenue?' It's going to be, 'How do we deal with a really tight environment? What do we cut? How do we go from here?'' Texans who own their home are slated to see a boost in the state's homestead exemption, or the slice of a home's value that can't be taxed to pay for public schools. Lawmakers raised the exemption from $100,000 to $140,000. The owner of a typical Texas home — valued at $302,000 last year, according to Zillow — would have saved about $490 on their school property taxes had the higher exemption been in place last year, a Tribune calculation shows. Those savings result from a combination of the increased homestead exemption and $2.6 billion in cuts to school tax rates in the state's upcoming two-year budget. Homeowners over the age of 65 or those with disabilities would see even greater savings under a proposal to raise a separate homestead exemption for those owners from $10,000 to $60,000. Business owners, too, will see breaks. Lawmakers approved legislation to exempt up to $125,000 of businesses' inventory from being taxed by school districts, cities, counties or any other taxing entity. Under current law, businesses don't have to pay taxes on that property if it's worth $2,500 or less. The state would pick up the tab for the amount of property tax revenue school districts would have collected from businesses if not for the increased exemption. Other taxing entities like cities and counties will either have to raise tax rates to make up for the lost revenue, or simply go without it. Voters must have the final say for those breaks to take effect because each involves changing the Texas Constitution. Texas lawmakers signed off on smaller tax breaks than they did two years ago. For one, legislators had a smaller budget surplus to pay for tax cuts than in 2023. Tax cuts they greenlit two years ago also wound up costing more than they initially anticipated. Abbott said earlier this year that voters should have the final say on every tax-rate increase proposed by any local government that collects property taxes. State lawmakers didn't go that far this year, but they made other tweaks intended to curb property tax bills. Legislators put tighter restrictions on local officials' ability to raise property taxes in response to a natural disaster. That ability came under scrutiny last year after Harris County officials used it to hike property taxes in order to respond to severe weather events including Hurricane Beryl. They also put tighter limits on school districts' ability to seek higher tax rates. Cities, counties and other taxing entities must now include ballot language that read 'THIS IS A TAX INCREASE' if they ask voters to approve a tax-rate increase or bond proposition under a bill lawmakers approved. Left out of lawmakers' tax-cut efforts are the state's 9.8 million renters. Tax-cut proponents have argued renters benefit from cuts to school tax rates. Unlike homeowners and businesses, state lawmakers didn't send direct tax relief to renters. Disclosure: Every Texan has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here. First round of TribFest speakers announced! Pulitzer Prize-winning columnist Maureen Dowd; U.S. Rep. Tony Gonzales, R-San Antonio; Fort Worth Mayor Mattie Parker; U.S. Sen. Adam Schiff, D-California; and U.S. Rep. Jasmine Crockett, D-Dallas are taking the stage Nov. 13–15 in Austin. Get your tickets today!

Texas businesses feel the pinch from Trump's tariffs, Fed survey finds
Texas businesses feel the pinch from Trump's tariffs, Fed survey finds

Yahoo

time20-05-2025

  • Business
  • Yahoo

Texas businesses feel the pinch from Trump's tariffs, Fed survey finds

DALLAS — Uncertainty spurred by President Donald Trump's trade policies is having a chilling effect on Texas businesses — a majority of which say consumers will ultimately pay the price of higher tariffs. Nearly 60% of Texas business owners say the Trump administration's back-and-forth on tariffs, a tax on imported goods, has already harmed their business, recent survey results by the Federal Reserve Bank of Dallas show. The constant change in policies has made it more difficult for businesses to plan ahead, forcing them to put off hiring and investing. 'Tariffs keep changing, so it's hard to make decisions right now,' one business owner told the Dallas Fed. Once those tariffs are in full swing, a majority of business owners said they expect the new levies to bite into profits, raise costs for businesses, and harm their business in the long run. More than 75% said they would pass increased costs from tariffs on to the consumer. Most said they'd do so within three months of tariffs taking effect. The April survey results come from the Dallas Fed, an arm of the Federal Reserve System. The Dallas Fed regularly surveys hundreds of Texas business owners across a range of industries to gauge their feelings about the economy, their business outlook and what effects policies have on their business. [Tariffs creating uncertainty in Texas as report shows slower revenue growth since late 2024] Trump has pursued tariffs on goods produced in other countries as a way to push consumers to buy more American-made goods, compel companies to relocate their manufacturing facilities in the U.S. and eliminate what he believes is an unfair trade imbalance between the U.S. and other countries. Economists have warned that families will bear higher costs as a result of tariffs, and that the country's economic output will suffer. Trump enacted a 10% baseline tariff on all countries in April, but initiated a 90-day pause on many additional tariffs targeted at specific countries he announced in April after global markets panicked. The administration has since sought to negotiate tariffs with individual countries. Trump said Friday his administration can't negotiate with every country and that many will see higher tariff rates without one-on-one talks with the U.S. More than two-thirds of business owners said they expect the cost of doing business to rise owing to higher material and equipment costs. A plurality expects revenue to fall and that they'll pull back on hiring, production and investment. Not every business said it plans to hike prices as a result of tariffs. Some 44% of businesses surveyed by the Dallas Fed said they'd absorb higher costs. Another 14% said they'd scale back their operations or shutter their business entirely. Some business owners plan to behave in ways Trump intended in response to tariffs. About 29% said they plan to find new domestic suppliers should they face higher duties on foreign goods. But less than 6% said they'd relocate production or services stateside. First round of TribFest speakers announced! Pulitzer Prize-winning columnist Maureen Dowd; U.S. Rep. Tony Gonzales, R-San Antonio; Fort Worth Mayor Mattie Parker; U.S. Sen. Adam Schiff, D-California; and U.S. Rep. Jasmine Crockett, D-Dallas are taking the stage Nov. 13–15 in Austin. Get your tickets today!

The heart of the US oil boom is slowing
The heart of the US oil boom is slowing

Reuters

time05-05-2025

  • Business
  • Reuters

The heart of the US oil boom is slowing

NEW YORK, May 5 (Reuters Breakingviews) - Oil fields are just as quick to make fortunes as break them. The 1901 Spindletop gusher in Texas jumpstarted the petroleum age, crashing oil prices. A mere two years later, over-extraction drove the field into decline. Sure, today's industry is far larger and more sophisticated. But even in the mighty Permian Basin, which turned the United States into the world's biggest oil producer, resources eventually deplete. There are signs that the peak is already at hand. Twenty years ago, the U.S. produced about 5 million barrels of crude oil per day, down by half from the 1970s. With even remote fields like Alaska's North Slope sputtering and the cost to find and extract an additional barrel of oil rising, collapse loomed. The turnaround came when engineers figured out how to inject a mix of water, sand and chemicals at extremely high pressure into shale formations, cracking them apart to reveal the natural gas and oil deposits within. This proved fruitful in fields from North Dakota and Appalachia, but perhaps nowhere more so than the Permian in Texas. This field alone now produces over 6 million barrels per day, nearly half of the nation's current production and more than the entire country produced before the technological revolution. While that approach, known as fracking, opened up vast new reserves, it has not upended the basic laws of economics. There is a cost to pulling black gold out of the ground. If market prices for it fall below those expenses, drillers will pull back. According to a survey of oil companies by the Federal Reserve Bank of Dallas, opens new tab, this break-even point is around $61 per barrel in the Midland Basin, the heart of the Permian, and $65 for the region as a whole. The market price for West Texas Intermediate (WTI), the widely used benchmark, currently hovers at around $62. That might not be existential. What matters to most drillers is the expected price of oil over the lifetime of a well, rather than right now. The fear is that the recent, sustained downswing in WTI prices indicates diminishing expectations of future demand - particularly important for the Permian, which has effectively become the world's swing producer, able to ramp up or dial down production quickly as conditions change. That sensitivity may mean muted future output. The International Energy Agency predicts annual global demand for oil will grow less than 1% this year, opens new tab. Over the long run, things look even grimmer. China accounted for roughly half of all global oil demand growth over the past two decades. The rise of electric vehicles there already has slowed growth to a crawl, and threatens to destroy demand. With a shift to battery power incipient elsewhere, the IEA, opens new tab predicts global oil demand will peak before the end of the decade, leaving a surplus of supply. While demand predictions should be taken with a grain of salt – as gyrations during the pandemic showed - it's harder to escape rising costs in the Permian. That $62 per barrel break-even price in Midland is up from $46 in 2017. Tariffs on crucial materials like steel will increase these costs further. Operating costs are not yet high enough to threaten existing wells, plenty of which are profitable at current prices. The Dallas Fed survey indicates that it would take a further 50% cut to the price of oil before it no longer made sense to keep pumping. Snag is, shale wells have an extremely short lifespan. On average, production drops by more than two-thirds after one year, opens new tab and 95% after six years. So if new wells begin to look like a bad bet, that will show up in overall production numbers quickly. Of course, average figures belie the wide differences in the quality of land from one patch to the next. Problem is, the best spots are running out. On so-called tier-one acreage in the Permian, drilling can generate a 30% return, based on net present value, at $50 a barrel oil. That's enough to cover operational risk, service debt and pay dividends. This prime real estate could run out in about 3.5 years, reckons research outfit Enverus. That's not the end of the world; there's another 3.5 years worth of oil that clears the hurdle at prices of $55. But put all of this together, and it's enough to make some of the earliest champions of fracking increasingly bearish. Harold Hamm, who made billions by pioneering the practice in North Dakota, said at an industry conference in March that U.S. crude production was beginning to plateau. Scott Sheffield, founder of Pioneer Natural Resources, said in a CNBC interview, opens new tab that one of the main reasons he sold the company to Exxon for $65 billion in 2023 was that it was running out of tier-one inventory - and that everyone else is, too. The Permian's future might have already been spelled out. The Bakken Formation, largely in North Dakota, birthed one of the earliest fracking booms. Production increased from roughly 90,000 barrels of crude a day in 2005 to 1.5 million in 2019. As costs rose and tier-one and -two acreage expired, North Dakota's production has declined by nearly a third since. The biggest energy firms are already in capital preservation mode, preferring to send cash back to shareholders. The top five Western extractors - Exxon Mobil (XOM.N), opens new tab, Chevron (CVX.N), opens new tab, TotalEnergies ( opens new tab, BP (BP.L), opens new tab and Shell (SHEL.L), opens new tab - spent about $225 billion, a record, on share repurchases and dividends over the past two years. Investment in new production stagnated. To add to the foreboding, cash flow from operations didn't cover the combination of capital expenditures and cash returned to investors at either Chevron or Exxon in the first quarter of this year. Of course, even if the peak is already here for the Permian, it will - like the Bakken - keep pumping for years. But the effects on U.S. policy could still be substantial. As both the world's biggest producer, and consumer, of oil, fights over fossil-fuel dependence have been intense. Even amid the dramatic rise of electric vehicles or renewable energy, politicians on both sides of the aisle have tended to favor rising production. If the Texan spigot starts to slow, and the U.S. economy tilts toward consumption, that may favor policies that favor decarbonization, if only to offset risks to national security. The last oil crisis served as a spark for all kinds of novel energy ideas. Such a change in the political economy would be the industry's biggest risk of all. Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.

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