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May 12, 2006
Tax cut bill on its way to Perry
House members, granting GOP Gov. Rick Perry’s wish, concurred with the Senate’s version of a proposal cutting school property taxes by one-third by 2008 — at a projected annual state cost exceeding $10 billion by 2009, according to the related fiscal note.
By a 136-8 vote, Representatives concurred with the Senate rewrite, which includes a $2,000 pay raise for every public school teacher, new money earmarked for high school improvements and a requirement that the school year start in late August every year starting in 2007.
Perry, who’s told political supporters he’s happy to see the measure progressing, will likely sign it into law. His spokeswoman, Kathy Walt, stopped short of saying so before the House action today, but said: “The Legislature can be proud of what they’ve done.”
Perry has already received related legislation that will overhaul the state’s business tax and require used car buyers to pay sales tax based on the blue book value of the vehicles. Lawmakers are still ironing out differences in a proposed cigarette tax hike and a second tax cut bill.
The Legislative Budget Board estimates costs to HB 1 through August 2007 of $3.9 billion, more than doubling to $8.7 billion the next year and $10.1 billion in ‘09 before dipping to $9.8 billion in 2010 and rebounding to $10.3 billion in 2011.
One yardstick: The state currently spends around $33 billion a year in state revenue on everything.
No one debating HB 1 on the House floor said gadzooks at the number. Nor did anyone say no problema.
Paying the costs of future tax reductions, said Rep. Warren Chisum, R-Pampa, the proposal’s sponsor, “is not going to be easy… It’s going to cost more when I wake up tomorrow than it will today.”
Rep. Jim Dunnam, D-Waco, chairman of the House Democratic Caucus, charged the Republican majority with fostering illusions for taxpayers in a session that has already seen proposals reach Perry creating a new business tax and a mandate that used-car sales reflect the actual value of vehicles.
Another illusion, he said, is the idea that intended changes will improve schools; he called language enabling private companies to take over schools lagging behind state performance expectations “vouchers steroids.”
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May 10, 2006
Rep advises on calculating new biz tax
Rep. Bill Keffer, R-Dallas, who failed to dissuade House members from adopting an expanded business tax intended to contribute to lower school property taxes, sent an e-mail to constituents this week featuring the form businesses would have to fill out assuming Gov. RIck Perry signs House Bill 3 into law.
His note and the form are below. And no, we don’t know what a water’s edge unitary combined basis is, though surely it has nothing to do with water …
Keffer’s words and the form from here:
Dear Friend of District 107 -
As the debate in Austin continues during the Special Session, I want to provide you with two pieces of information to help you understand what’s at stake. As you know, HB 3 (which creates a new business tax) was passed by the House and the Senate and is now awaiting the Governor’s signature. I am attaching the new “Schedule B” that every business would have to complete to calculate its tax liability under this new tax. I encourage you to complete it for your business and distribute to others; only then will you know what the tax will really mean for you. I also am attaching my speech on the House floor in opposition to HB 3, which I think summarizes my concerns with this proposal. Since the Senate has not acted on HB 1 (using $2.3 billion of the surplus to reduce property-tax rates) and HB 2 (the dedication of revenue to reduce property-tax rates), it remains to be seen what will finally happen. It’s never too late to let your voice be heard.
For Texas,
Bill
Schedule B:
Line and Item Amount Amount
Form to be filed and taxes paid on a water’s edge unitary combined basis. (See instructions for more detail on each line item)
Total Revenue (if $300,000 or less, enter “0” on lines 7 and 9) $
Less Certain Deductible Expenses
a. "Cash" compensation, such as wages, salaries, stock options, not to exceed $300,000 for any single employee…………………………….$b. Employer's Cost of Retirement Contributions…...$ c. Employer's Cost of Employee Health Insurance...$ d. Employer's Cost of Worker's Compensation…….$ e. Employee Compensation (sum of a through d )…$ f. Cost of Goods Sold (similar to federal tax return).$ g. Enter greater of line e or line f …………………………………………$Margin (line 1 minus line 2g, but nte 70% of line 1)……………………………$
Texas Apportionment (same as current franchise tax)
a. Gross Receipts Everywhere…………………..$b. Texas Gross Receipts…………………………$ c. Percentage of Gross Receipts Attributed to Texas (line 4b divided by line 4a)…………………………..$Taxable Margin (line 3 multiplied by line 4c)…………………………………..$
Tax Rate (wholesalers & retailers, 0.5%; all others, 1%)………………………..$
Tax (line 5 multiplied by line 6)…………………………………………………$
Less Prior Credits Earned……………………………………………………….$
Tax Due (line 7 minus line 8 but not less than zero)…………………………….$
Permalink | Comments (2) | Categories: Business and economic development, Governor, House, Taxes
April 24, 2006
House wants credit for property tax cut
If you’re reading this blog (thanks by the way), you probably know that there’s a tax debate going on up in your Legislature. But if you have friends who don’t read it, tell them the secretary of state will be more than happy to fill them in.
The House version of Gov. Rick Perry’s tax overhaul says that the secretary of state — an office that has little involvement in tax policy — will write a letter and send it to county tax assessor-collectors so they can send it out to taxpayers around Oct. 1. The letter would tell voters, er, taxpayers about the property-tax reductions that, presumably, the Legislature will have just passed.
Some lawmakers said this is simply a government-funded political advertisement a month before an election. “When we tax people and we charge them a tax, we don’t ever send them a notice,” said Rep. Senfronia Thompson, D-Houston.
Rep. Ana Hernandez, D-Houston, tried to change the proposal so the comptroller, who deals very much with tax policy, would write the letter. Initially an effort to kill her amendment was defeated. But then some lawmakers’ “machines malfunctioned.” Here’s what that usually means: They either saw how the vote came out and didn’t want to make anyone important mad by siding with the wrong side, or they were asked nicely by House leaders to change their votes. When the dust settled, Hernandez’s amendment failed.
Something else to keep in mind: the comptroller is a woman named Carole Keeton Strayhorn who is running against GOP Gov. Rick Perry. She has called Perry’s tax proposal, in part, a “hot check.” Her letter indeed would have been interesting.
Instead it will be written by Perry’s appointed secretary of state.
“It’s for transparency, it’s to make sure everyone is aware of what we have done,” said Rep. Beverly Woolley, R-Houston, a proponent of sending a letter authored by the secretary of state.
Seems pretty transparent, indeed.
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Tax debate fibrillations
Gov. Rick Perry huddled with House Republicans from the Houston area this morning, pleading a case for his business tax plan against an onslaught of opposition rooted in Harris County — including “tea party” protesters poised to toss tea bags onto the House floor (though none have been sighted falling yet).
Perry didn’t necessarily gain ground for the plan, observers say, but members didn’t piddle on it either. One of them, according to a participant, did an excellent job of not making much eye contact.
Rep. Larry Taylor, R-League City, said Perry presented an excerpt of polling suggesting that the business tax developed by a commission headed by former state Comptroller John Sharp has voter support.
Taylor indicated, however, that he’s not sure he’ll vote for the plan unless it has provisions reining in the ability of school districts to drive up local property taxes after lawmakers achieve a one-third reduction in rates statewide.
“I’ve just been leaning either way,” Taylor said.
Translation: a good day to stay away from the Capitol… unless you like a fine mess.
Inside chatter: Contrary to intentions aired last week, the GOP-majority House didn’t take up House Bill 3, the tax plan, first this morning because the authors are trying to finish up its fiscal implications. The private reason? Remaining uncertainty over whether House Speaker Tom Craddick, R-Midland, can round up a majority in favor of that plan.
Instead, members will dive first into debate on House Bill 2, providing for any future state revenue to be dedicated to property tax reduction — an idea sure to draw fire from Democrats focused on ensuring more school funding (and teacher pay raises).
Permalink | Comments (1) | Categories: Governor, House, Taxes
April 20, 2006
House committee passes business tax change
Passing a tax bill is supposed to be more difficult than this.
Gov. Rick Perry’s overhaul of the state’s general business tax received generally favorable testimony in the House Ways and Means Committee today, and then the committee approved the plan 7-1. Some minor amendments were offered, but Perry’s plan largely passed intact.
The lone dissenting vote came from Rep. Ken Paxton, R-McKinney.
This afternoon, the committee is working on a plan to require a standard value for reporting the sales price of cars for tax purposes, and a plan to increase cigarette taxes by $1 per pack. If those two pieces of legislation pass, as expected, then Gov. Rick Perry’s full tax overhaul will arrive on the House floor next week with only a few changes.
Of course, GOP House Speaker Tom Craddick chooses who sits on the Ways and Means Committee, whereas the full House encompasses a much broader range of opinions. So it won’t be so easy next week. Still, Perry’s folks must be pleased by the progress of events in Ways and Means to this point.
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April 18, 2006
Perry: Let's go down to 90 cents
Gov. Rick Perry, who wants to use part of the state’s newly enlarged budget surplus for property-tax cuts, said today that reducing the school tax rate to about 90 cents per $100 in property value sounds good. Until now, he’d been proposing cuts that would take it to $1.
Many districts are now at $1.50 per $100 in property value. Take that down to 90 cents (over two years) and the owner of a $100,000 home would save $510. The owner of a $200,000 home would save $1,020. And so on.
Here’s Perry’s rationale: The surplus is about $4 billion larger than previously believed. Perry subscribes to the theory that John Sharp has been spouting recently (and attributing to Bob Bullock) that it’s safe to spend about 25 percent of a onetime surplus and not dig too great a hole. (Many advocates for increased services and spending disagree, by the way). So if you take $1 billion out of the $4 billion in newly announced surplus, that buys you another 10 cents in property tax reduction.
Perry made his statements while picking up an endorsement for his plan from the Texas Association of Mexican American Chambers of Commerce.
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July 17, 2005
$7,500 hike in homestead exemption passed
The Senate Finance Committee, in a vote along party lines, this afternoon defeated a proposal to double Texas’ homestead exemption to $30,000 a year. Instead, the committee voted to raise the amount of residential property that is exempt from taxes to $22,500.
Higher property tax exemptions generally help the owners of less expensive homes since a larger percentage of their homes’ values are exempt from taxes.
The vote was seen by legislative leaders as a key to keep negotiations moving on House Bill 3, the tax bill. A final version of that bill must be approved by both the Senate and House by Wednesday, when the special legislative session ends, or lawmakers risk being called back to Austin for another special session on school finance.
Today’s crucial 10-5 vote came on a proposal by Sen. Gonzalo Barrientos, D-Austin, that would have increased the current homestead exemption on property taxes from $15,000 — a move Barrientos argued would more equitably spread out property tax relief as proposed in HB 3, the tax bill.
The final vote favored the existing wording in Senate Joint Resolution 13, which proposes a constitutional amendment to increase the homestead exemption amount by $7,500 — to $22,500 a year.
“All we’re doing is spreading the tax break from the low income homeowner on up,” Barrientos explained, noting that proposed reductions in property taxes will benefit mostly upper-income Texans. He noted that the Senate-approved version of HB 3 includes a $30,000 homestead exemption, although it is not funded.
But Committee Chairman Steve Ogden, R-Bryan, warned that the larger exemption would be too expensive and would derail delicate negotiations with the House over a final version of HB 3.
“If you adopt the larger amount, you’re killing the SJR because there’s no way to fund it,” he said. “There’s no way we’re going to be able to pay for, or adopt, that amount” in the final tax bill.
Even so, several members of the committee argued for the larger homestead exemption. Barrientos and others argued it could be paid for by cutting overall property taxes four cents less than legislative leaders have proposed.
“This is by far the more equitable way to distribute the tax cut,” said Sen. Eliot Shapleigh, D-El Paso, echoing the sentiments of Barrientos and others.
Other senators questioned who would pay for the additional exemption. “I have some serious heartburn over what would be required to pay for it,” said Sen. John Whitmire, D-Houston. “I’m afraid the cost of paying for it would hit my constituents.”
Barrientos said middle- and lower-income Texans would benefit the most, because they would pay lower property taxes on their homestead — a bigger cut than they would get through the property-tax reductions proposed in HB 3.
Sen. Kim Brimer, R-Fort Worth, questioned whether renters would get hit with higher lease prices, since their landlords would not benefit from a bigger reduction in property taxes. (The homestead exemption only applies to owners who live on their property, thus excluding landlords.)
Ogden appeared frustrated by the arguments. “This is clever argument designed to kill HB 3,” he said at one point.
The committee then voted against Barrientos’ amendment 10-5. They then voted 14-1 for the resolution by Sen. Jeff Wentworth, R-San Antonio, with Barrientos casting the lone ‘no.”
Permalink | | Categories: Education, Senate, Taxes
May 19, 2005
Talks are slow on business taxes
Asked Thursday if any progress had been made on a major tax plan facing House-Senate negotiators, Lt. Gov. David Dewhurst said, “not yet.�
Dewhurst quickly added, however, that he and Gov. Rick Perry and House Speaker Tom Craddick have been talking about how much they want to cut maintenance and operations taxes for schools and how much new money to put into education as part of the overall school-finance reform effort. That amount is expected to be between $2.5 billion and $3 billion.
Dewhurst said early Thursday afternoon that he and Craddick had not yet talked about what could be the fatal element of the tax debate, a new broad-based business tax. He did not point fingers directly at the House, but there was a certain “it takes two to tango� tone to his comments.
“Given a motivated counterparty, I’m sure both groups can sit down and reach an agreement in a short period of time,� he said. “I can reach an agreement on this within hours with a delegate from the House. We know what the options are. As soon as we agree on how much local school property tax that we want to generate, we ought to be able to plug this in.�
The Senate Finance Committee approved House Bill 10, an emergency appropriations bill, Thursday night, including about $2.4 billion in money for education reform. The spending of that money, however, is contingent on the passage of the “school” in school finance reform, also known as House Bill 2.
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Armey attacks tax proposals
Former U.S. Rep. Dick Armey of Texas says state lawmakers should scrap any plans to tax company payrolls to pay for reductions in local school property taxes.
Payroll tax options figure into Texas House and Senate versions of House Bill 3, under review by a joint conference committee.
Armey, former House Republican majority leader, is co-chairman of FreedomWorks
Tina Peyton of Dallas, representing Texas FreedomWorks, said she hopes negotiators will reach a tax plan that does not cut property taxes by overburdening businesses.
Peyton said she appreciates the leadership of Lt. Gov. David Dewhurst and House Speaker Tom Craddick, R-Midland, but wishes Gov. Rick Perry would “inject himself� more into the tax debate.
Visiting with reporters Wednesday, Perry declined to identify tax ideas that he favors or opposes.
Peyton said Thursday: “It’s time for him to show up.”
Perry spokesman Robert Black said Perry “remains committed to a substantial property tax cut, no net tax increase and a pro-growth, pro-jobs tax policy. He’s also urging legislators to hold the line on spending.�
Of Peyton’s comment, Black said Perry has been involved in negotiations but “chooses not to have these negotiations in the press. And that’s a policy that will continue.�
Armey’s statement says, in part:
“You can’t stand on principle with feet of clay. Those who believe in the principles of limited government and lower taxes should stand on their principles and reject this tax hike, or be prepared to be incapable of ever credibly doing so again.�
“It’s impossible to believe that the leadership in the Texas legislature think they can increase spending by 14 percent, but make Texans believe they are cutting taxes. It is shocking to me -– whether it is in Austin or Washington -– to see conservatives buy in to the failed notion that we can tax and spend ourselves into prosperity.�
“The taxpayers elected the governor and gave the Republicans control of the legislature for the first time in 100 years because they pledged to control government spending and maintain our pro-growth tax system. Governor Perry and pro-growth members of the legislature should keep that pledge and stop the ‘wage tax’ in its tracks.�
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May 13, 2005
Seniors would see tax penalty decrease
People who are 65 or older would be charged a 6 percent penalty — half of the current rate — when they fall behind on paying installments of a property tax payment plan, under a bill the House approved Friday.
Currently, seniors pay a 12 percent penalty and interest if they are late in making a planned payment. House Bill 2254, by Rep. Patrick Rose, D-Dripping Springs, would bring them in line with the penalty charged to other taxpayers who are delinquent on their taxes.
The bill must be read and approved a final time before it goes to the Senate.
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May 11, 2005
Indexing in ditch
Remember HB 5? That was the bill by Rep. Mike Krusee, R-Williamson County, that would allow the state’s 20-cent-a-gallon gas tax to grow along with inflation. It seemed to have a lot going for it. House Speaker Tom Craddick gave it that tantalizing low bill number, signaling his support, and then made it explicit with statements to the press.
With everyone complaining about toll roads, the time seemed right for at least some lawmakers to overcome their natural political aversion to tax-raising. And the increase, tiny initially at about a half-cent in the first year (just $2.50 to $5 a year for the average car), would have taken the pressure off legislators to periodically vote for a tax increase.
But the bill lost momentum in the wake of rising gasoline prices, and Krusee said in March that he’d let it ride for a while before bringing to the House floor. Turns out the bill took an involuntary ride in the wrong direction.
The bill got caught up in mid-April, along with several other bills, on a point of order and was “recommitted� to the Ways and Means. Where it remains. With the deadline past for getting bills out of committee, the indexing of the gas tax is officially dead. Might be time to consider getting a toll tag.
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May 10, 2005
Business group says no to Senate tax proposal
Senators were greeted this morning with fresh opposition by the state’s largest business group to their proposal to expand the franchise tax, create a statewide property tax and increase sales and tobacco taxes to fund a teacher pay raise and property tax reductions.
Like the Texas chapter of the National Federation of Independent Business, the Texas Association of Business doesn’t like the version of House Bill 3 approved by the Senate Finance Committee and awaiting approval of the 31-member Senate.
The business association objects because the plan’s half-cent on the dollar increase in sales taxes is too low, putting too much of a burden on a proposed expansion of the corporate franchise tax, association president, Bill Hammond, said today.
Hammond likewise expressed concerns regarding the plan’s envisioned voter approval of a statewide property tax to enhance funding equity among school districts.
If voters turn thumbs down on the statewide tax, Hammond noted, the Senate plan would have maximum school property tax rates dropping to $1.30 per $100 valuation from the current maximum of $1.50 per $100 valuation, with local districts still allowed to add 15 cents in taxes per $100 valuation over six years — resulting in too little tax relief, he said.
Earlier in the legislative session, the Texas Association of Business was neutral on a House version of the tax plan which swapped in a 1-cent sales tax increase with its proposal to replace the franchise tax with a tax giving businesses the option of paying taxes on their capital investment or payroll.
Crediting House Speaker Tom Craddick, R-Midland, and Lt. Gov. David Dewhurst with seeking a “fair solution,” Hammond said: “It’s an extremely difficult task.”
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May 9, 2005
The official numbers on HB3
The Legislative Budget Board released over the weekend an analysis of how taxes on various income groups and industries would change under the version of House Bill 3 that the Senate is expected to debate as soon as tomorrow.
Families with total annual incomes smaller than $100,000 would see their taxes go up, the analysis says. Those with incomes between $101, 600 and $140,900 would pretty much break even, and those with incomes greater than $140,900 would see a slight tax cut, about 1.5 percent on average.
The analysis looks at the tax impact in budget year 2007, which begins in September 2006. Changes are compared with current law.
The largest increase, 4.1 percent, would hit families with incomes between $22,833 and $31,735. Families with incomes between $31,735 and $51,750 would see average increases of at least 3.5 percent.
It’s important to remember these are average increases. The Senate plan increases cigarette and alcohol taxes significantly, so if you don’t smoke and don’t drink you might be spared the increases.
The plan that passed the House cut taxes for families making $64,325 or more. In that regard, the House plan treated middle-class families better. However, let’s not forget that the comptroller quickly said that, because of changes made on the House floor, the House plan did not balance. When the House was at the same stage the Senate is at now, the budget board said its report would be a tax increase for families making less than $100,000, also.
Senate leaders have stressed that their plan will balance over five years.
Also, the Senate plan is less extreme at each end of the income spectrum. The Senate plan is a 0.4 percent tax increase for families making $13,415 or less. The House plan was a 3.1 percent increase for that same group. The Senate tried to help this group by including in its plan an increase in public assistance for low-income families to offset increases in the sales tax, which are considered to hit the poor the hardest.
Also, the Senate plan is a 1.5 percent tax cut for families making north of $140,853. The House gave that same group an average tax cut of 5.7 percent.
Service industries, as well as companies specializing in construction and trade, would see the biggest tax increases under the Senate plan, the budget board says. The big winners would be agriculture, real estate and the financial and insurance sectors.
Senators from each party have a stack of changes to the tax bill that they might present on the floor Tuesday, so we’ll watch to see who steps into the winner’s circle if any of those are adopted.
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May 6, 2005
HB3: A work in progress
So what’s the schedule for House Bill 3, the troubled tax plan, to move forward in the Senate?
Lt. Gov. David Dewhurst said today the Senate Finance Committee is to meet beginning later this morning, after the Senate does just a few bills, to pass out the revised bill. That should happen by this afternoon.
Dewhurst said he intends to call the Senate into session briefly on Saturday to keep the clock ticking so that, procedurally, the Senate could take up the measure on Monday — so long as the fiscal note is completed, as required by law and Comptroller Carole Keeton Strayhorn certifies that its numbers will balance.
“We are still on target for next week,” Dewhurst said.
At least that was the official word at 10 a.m. today. Just 30 minutes later, after a morning or feverish private conversations on the Senate floor, the Senate recessed for 30 minutes into a closed-door caucus to discuss “scheduling issues” on HB3.
“We’re going to get it out, one way or the other,” said one senator as he hurried into the caucus meeting.
Stay tuned.
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May 4, 2005
Senator says current tax plan economically dangerous
A Republican senator, airing objections to the Senate’s draft plan to swap sales and other taxes for reductions in school property taxes, said today he stands “solidly in opposition” and that colleagues have qualms about the plan’s viability.
“The Senate is headed in the wrong direction” on the Senate version of House Bill 3, said Sen. John Carona of Dallas. “Hopefully, the final work product will be acceptable.”
Carona spoke a day after sending a letter to the leaders of the Senate’s finance and education panels that he copied to the rest of the Senate and Lt. Gov. David Dewhurst. He said he’s fielded no immediate response, but at least 10 colleagues privately share his concerns.
Sen. Mike Jackson, R-La Porte, chairman of the Senate Republican Caucus, said Wednesday that the situation “is way too fluid right now” to judge whether senators will vote for or against the tax plan.
Ogden, asked to comment on Carona’s letter, said: “All I’m worried about now is getting the (plan) out of committee.” Asked if the plan will be changed by senators, Ogden said: “I don’t know.”
Coron’s Tuesday letter questions the wisdom of language in a proposed constitutional amendment, needing voter approval, creating a statewide school property tax to replace most local school taxes.
A statewide tax, which would require two-thirds’ approval in the Senate and House before reaching the voters, is “foolish,” Carona said today. “It’s not going to pass in the House,” where Speaker Tom Craddick, R-Midland, has said he doesn’t see sufficient support.
Carona said the Senate has been “over-promising” property tax relief. Two years ago the Senate sent the House a plan cutting school taxes in half; its current plan projects a reduction by 27 percent by 2006-07.
His letter states the state cannot afford more than a reduction of school tax rates to $1.25 per $100 valuation compared to the current maximum of $1.50 per $100 valuation; the Senate draft proposes cutting tax rates to $1.10 per $100 valuation by 2006-07.
Carona’s letter also questions the wisdom of including any element of employee compensation, or payroll, in a revised corporate franchise tax. He proposes instead that the existing franchise tax be expanded to most businesses but continue to be levied based on a percentage of profits, possibly including 20 percent of wages, in an attempt to tap salaries paid to each firm’s highest officers.
Carona, who owns a national property management firm, said today: “It’s a terrible time to be levying a burdensome tax on the service industry. … The Senate’s latest version is harmful to emerging Texas businesses. It’s bad for our economy.”
Finally, the letter urges spending $4 billion more on education in 2006-07, compared with $2.7 billion as discussed by senators.
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April 27, 2005
Tax rumor knocked down
Rumors swept the Capitol hallways this afternoon that the Senate was axing the business activity tax from its proposed tax overhaul in favor of giving businesses a choice of taxes.
Not so, said Lt. Gov. David Dewhurst.
For three weeks, Dewhurst said he has challenged the business lobby to come up with a tax-choice plan, similar to the House version, that would be fair to all segments of business. So far, no luck.
The rumor started apparently after Bill Allaway with the Texas Taxpayers and Research Association offered a plan to Senate tax bill writers.
The plan, however, was not the uniform and fair tax Dewhurst said he wanted.
Allaway, giving a speech in Dallas, was not available for comment.
Of course, that leaves the Senate with a couple more days before the Finance Committee is expected to kick out its version of a tax bill to reduce property taxes and finance schools.
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April 19, 2005
When is a tax not a tax?
Lobbyists will be watching the Senate to see if closing the so-called loophole in the franchise law is considered tax or nontax revenue.
On Tuesday, under questioning from reporters, Lt. Gov. David Dewhurst didn’t say.
He promised to release early next week a list of the sources of revenue for the Senate’s version of the school tax bill.
The Senate hopes to add several hundred millions dollars to schools with nontax revenue sources.
If closing tax loopholes isn’t counted as tax revenue, then the Senate will have to include more taxable sources in its menu to offset a reduction in property taxes.
Dewhurst said the Senate’s goal continues to be reducing property taxes by one-third and maintaining the current tax balance between businesses and consumers.
Businesses now pay between 54 and 58 percent of the state school tax bill, Dewhurst said.
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April 18, 2005
Payback for Hill?
The House on Monday approved a bill sponsored by Rep. Fred Hill, R-Richardson, that would limit the property tax liability of storage facilities for medicines.
Hill’s proposal ultimately passed by a wide margin, but only after House Speaker Tom Craddick overruled an effort to kill it on procedural grounds. The bill also narrowly survived a vote on an amendment that would have gutted it.
Opponents argued that the bill amounted to corporate welfare for these facilities. But the effort to kill it was widely seen as retribution against Hill, an outspoken critic of efforts to reduce the cap on annual increases in property values. Those proposals were killed in the House last week.
The most vocal Republican supporters of lowering the appraisal caps tried to derail Hill’s effort today.
If it was retribution, it’s good to see such tactics know no party affiliation.
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April 11, 2005
Even compromise on appraisal caps has opponents
Today’s relatively slow session in the House may have served as a quiet pregame show for tomorrow’s main event: A vote on Gov. Rick Perry’s proposal to limit property tax increases by cities, counties and school districts.
Rep. Dwayne Bohac, R-Houston, has brokered a compromise that he hopes will get his constitutional amendment, HJR 35, the 100 votes it needs to go to the Senate. Bohac spent today combing the House floor and counting heads. He was, he said, doing what he needs to do — “Moving people from nos to undecideds.”
Bohac already has faced opposition from many lawmakers, even Republicans, who opposed the policy. The compromise today drew fire from a new flank — people who support appraisal caps.
“Sadly, I think, Rep. Bohac has compromised himself out of accomplishing anything,” said Rep. Dennis Bonnen, R-Angleton, an appraisal cap supporter. “The goal has been devastated. We are better off doing nothing than to do what he’s offered.”
The compromise would allow cities and counties to opt out of the appraisal caps, which would limit the amount of money they could raise. It would not exempt school districts.
The current cap is a 10 percent increase per year. Bohac had proposed a 5 percent cap, though even that number might shift on the House floor tomorrow.
Bonnen said he did not know who would be assuaged by the compromise. He added that some members might be afraid to vote against a bill that might be seen as controlling tax increases.
“It’s a joke,” he said.
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April 7, 2005
Appraisal cap rises again
With less than a week before a key tax proposal returns to the House floor, Rep. Dwayne Bohac, R-Houston, proclaimed today he had resurrected a proposed constitutional amendment capping property appraisal increases.
His compromise would allow cities and counties to decide whether the taxable value of property should rise as much as 5 percent or 10 percent per year. School districts, though, would have to hold their property value increases to 5 percent. He said he expects the compromise to pass, echoing an opinion he voiced about the original measure last month.
Bohac said the compromise addresses cities’ and counties’ concerns about maintaining control of their revenue stream “and at least allow folks, where there is an issue, to have their day.”
The appraisal caps, which fell off the House’s agenda last month ostensibly due to technical issues in the bill, would need 100 votes from the 150-member House to move on to the Senate. Another proposal — capping city revenues and tying the limits to tax rates (as opposed to property values) — would not need a constitutional amendment. Both will likely come up for a vote next week, said House Speaker Tom Craddick.
Craddick said the straight appraisal caps have not been able to get the votes they need, but a revenue cap or some compromise might fare better. Revenue caps have flown largely out-of-sight this session, whereas appraisal caps are a centerpiece of Gov. Rick Perry’s agenda.
“I think you get the same — maybe you get an even better effect (for taxpayers) with a revenue cap,” Craddick said.
But Rep. Fred Hill, R-Richardson, a leading opponent of appraisal caps, said revenue caps also pose deep economic problems for cities, counties and school districts. But he said he is not sure how the issue will shake out next week — he said Perry’s office are lobbying lawmakers hard, trying to build support for caps.
“To negotiate a compromise on this issue simply to have a compromise is not a good solution,” Hill said. “We’re doing this for all the wrong reasons. We’re doing this because of politics, not because it’s good public policy.”
Permalink | | Categories: Taxes
March 29, 2005
Appraisal caps will be back, eventually
A tax reform capping property appraisal increases, a signature piece of Gov. Rick Perry’s agenda, probably won’t get a vote in the House this week. Maybe not next week, either, said Rep. Dwayne Bohac, a Houston Republican trying shepherd the proposal through an ambivalent House.
But don’t mistake appraisal caps for something dead. Perry dropped in on the House today to proclaim his notion’s vitality.
It will require 100 votes to get the caps — which would require a constitutional amendment — through the 150-member House. There will be some Democratic opposition, and even several Republicans are balking at the idea, saying the caps would badly restrict the amount of money that cities, counties and school districts could raise.
Rep. Fred Hill, R-Richardson, is helping lead opposition to the proposal. He chatted with Perry at length, and visibly amicably, on the House floor today. Even after the discussion, Perry expressed confidence that appraisal caps would become law and said he wasn’t worried that the issue would split Republican lawmakers.
“Anything new causes people to ask questions,” Perry said, “which is fine.”
Permalink | | Categories: Taxes
March 23, 2005
Appraisal caps put off
The House will put off today’s scheduled vote on property tax appraisal caps — a focal point of Gov. Rick Perry’s legislative agenda — until at least next week.
Two technical errors in the committee report caused the delay, said Rep. Dwayne Bohac, R-Houston, the author of House Joint Resolution 35. If approved, the measure would add to this year’s constitutional election a referendum on capping appraisal increases, on both residential and commercial property, at 5 percent per year.
Bohac expressed confidence that his bill will pass once members get a chance to vote on it. As a constitutional amendment, the measure needs 100 votes to move onto the Senate.
But it’s unclear that the bill will get the support it needs. Texas cities and counties are campaigning hard against the measure, and it may run into unexpected opposition from business groups as well.
“I think it’s going to be very close,” said Rep. Jim Keffer, chairman of the House Ways and Means Committee.
Permalink | | Categories: Taxes
March 17, 2005
New appraisal cap plan from Senate
Senate leaders today unveiled their own version of property-tax relief.
Bottom line: Five percent cap, with an option-out provision.
Under a bill filed today by Sen. Kyle Janek, R-Houston, local property-tax appraisals on homes could be raised no more than five percent a year unless the governing boards of the taxing entities — cities, school districts, counties among others — voted publicly to do so.
Appraisals can be increased no more than 10 percent a year under current law.
“Appraisal creep is driving some people out of their homes,” Janek said in announcing the bill and a companion resolution to change the state Constitution.
“We often see this debate as a fight between state and local government … This would give local jurisdictions the ability to opt out. It would give them control.”
Added Lt. Gov. David Dewhurst: “Local control would mean just that. If there is a reason to justify opting out, they could do it.”
Local school districts alone collect about $15 billion a year in property taxes, and Dewhurst estimated the new Senate plan might provide as much as $100 million in relief to homeowners across the state.
The Senate plan would cover only homestead appraisals.
Initial reaction from lobbyists for various cities, counties and school districts: still opposed to a cap. The Lege would just make us look like the bad guys when taxes go up, they say.
The proposal was included in Senate Joint Resolution 4 and Senate Bill 1349, filed by Janek.
Permalink | | Categories: Taxes
March 15, 2005
Tax bill passes again
Lawmakers approved House Bill 3, the major tax-shift legislation, on the third and final reading this morning. The vote was 73-68, with four members present but not voting and five absent.
The issue of school finance reform now moves on to the Senate. Stay tuned.
Permalink | | Categories: Taxes
March 14, 2005
Keffer: We're close to Senate plan
The architect of House Bill 3 predicts that it may find favor in the Senate, though tweaks and adjustments are inevitable.
“I think we’ve come together with a choice (on business taxes) that’s a lot closer than where we were,” House Ways and Means Committee Chairman Jim Keffer, R-Eastland, said after the House approved the bill shortly before 10 p.m. Monday.
“It’s tough. It’s been a tough bill… . But I’m very pleased with the outcome. We’re going to make it a better bill (in the Senate).”
Keffer said he plans to meet with Senate leaders later this week, after final passage by the House, which could be as early as Tuesday.
Permalink | | Categories: Taxes
Craddick on vote: Tax drop sold bill
With tonight’s 78-70 passage by the Texas House of House Bill 3, Speaker Tom Craddick breathed a sign of relief.
He knew it would be close, perhaps even 77-71.
“A lot of members of the House are relieved they have it done,” Craddick told reporters shortly after the House voted.
The highlights? “We closed loopholes in the tax structure … (with) a fairness where everybody pays something … (and) it includes a large property tax reduction … The key that sold it is the property tax reduction.”
He cited recent polls showing that Texans overwhelmingly favor lower property taxes. And they don’t care where lawmakers find the money to reduce them, the speaker said.
“I consider this to be a property tax reduction bill,” Craddick said.
Permalink | | Categories: Taxes
It's not pandering, it's Pampering
The Texas House of Representatives just voted to end the sales tax on diapers and instead apply the sales tax to elective cosmetic surgery.
Rep. Scott Hochberg, D-Houston, received bipartisan support for the tax swap, which came about seven hours into the floor debate on a major swap in state taxes. Hochberg said the language he used regarding cosmetic surgery, according to what he has seen in other states, would protect medical procedures from the tax.
Permalink | | Categories: Taxes
They'd rather tax Coke than Coors this time around
During Monday’s debate on changes to the state tax system, House members overwhelmingly voted against an effort to impose a 3 percent tax on alcohol as part of the shift to higher consumption taxes to pay for property-tax cuts.
Rep. Charlie Howard, R-Sugar Land, offered the amendment, saying alcohol taxes had not gone up for years. Opponents said Texas already has some of the highest alcohol taxes in the country.
By contrast, the tax bill in its current form imposes a 3 percent “snack tax” on some food and drinks, including sodas.
Permalink | | Categories: Taxes
Perry: House tax plan 'good starting point'
While the House twisted and churned today over House Bill 3 — the big tax bill — The Guv reiterated that it’s not a perfect plan.
“But it’s a good starting point,” he told the Texas Daily Newspaper Association during an early-afternoon speech at the Driskill Hotel.
“We’ve still got a substantial way to go. A substantial amount of massaging still needs to be done.”
Translation: The Senate already is working on its own plan, and we hope they can revise the bill enough to make it passable.
Word is the Senate will provide different options for the collection of business taxes and will up some spending for human-services programs, among a number of tweaks, perhaps some the House may not like.
Permalink | | Categories: Taxes
March 8, 2005
Small business owners: Fuggettabout more taxes!
Today is Small Business Day at the Capitol and, make no mistake, they aren’t the least bit happy about the prospective of higher taxes.
Any kind of taxes.
They made that crystal clear today to Lt. Gov. David Dewhurst when he addressed their morning legislative breakfast at the Driskill Hotel. That, after they spent a long while bashing new taxes and school finance and workers comp in an open-mike forum.
“You’re getting ready to create an economic disaster for business owners,” one bluntly told the Lite Gov.
Dewhurst offered them this olive branch: Whereas the House revenue plan includes a payroll tax (which most businesses hate), the Senate plan relies on an overhaul of the current franchise tax system (also hated) to “level the playing field for everyone.”
That’s Legispeak for: We’re going to collect more in taxes, but from more people, and some will pay less.
“The Senate is not enamored with the payroll tax,” Dewhurst said. “Everybody has to be in whatever system we create… . If we start exempting oil and gas or lawyers or doctors, where do we stop?”
The Senate plan drew applause from the 100 or so folks at the breakfast.
Next up: Gov. Rick Perry at noon. And later today, Texas members of the National Association of Independent Business are scheduled to chat with House Ways and Means Committee Chairman Jim Keffer at a Capitol meeting.
Wow, bet that’ll be … fun?
Permalink | | Categories: Taxes
March 7, 2005
The meeting that never began
If you’re waiting to attend the House Ways and Means meeting today, you might not want to make dinner plans.
The tax-writing committee was scheduled to meet to discuss House Bill 3 at 9:30 a.m. this morning. Then it was postponed until after the House’s morning session adjourned. Then it was postponed until 3 p.m. Now a sign on the committee door says the committee will meet at 6 p.m.
Anybody taking bets?
The problem is believed to be based on an analysis of the bill released Friday by Comptroller Carole Keeton Strayhorn. Her office says the bill would raise about $1 billion less in taxes than House leaders claim. The House has been very careful to craft a plan that is revenue neutral, meaning the state will collect as much money in the new and expanded taxes as schools would lose in a one-third cut of property taxes. Strayhorn’s shop says the bill doesn’t do that in its current form.
See you at 6. Or 9. Or …
Permalink | | Categories: Taxes
March 3, 2005
As long as we're adding taxes . . .
Add newspapers to the list of items that would be subject to the sales tax under a proposal backed by House leaders.
Aides to House Speaker Tom Craddick said that the drafters of House Bill 3 were instructed to include newspapers among the items now covered by the sales tax, but in a technical glitch the language was not included. Their plan is to add newspapers on the floor of the House next week.
The bill calls for the state sales tax to grow from 6.25 percent to 7.2 percent, making it the highest state rate in the country. It also would be expanded to include bottled water, car washes and repairs and billboard advertising.
Including newspapers is projected to raise $25 million per year for the state.
Permalink | | Categories: Taxes
February 22, 2005
Bill would extend tax holiday nearly fivefold
Sen. Rodney Ellis wants to give Texans more time to buy back-to-school clothes without having to worry about those pesky sales taxes.
Ellis, D-Houston, has filed legislation to extend the August sales-tax holiday from three days to two weeks. He also wants to expand the sales-tax exemption to cover school supplies. Citing figures from Comptroller Carole Keeton Strayhorn’s office, Ellis said the bills could save Texans nearly $590 million by 2010.
The exemption prompts some consumers to spend like mad as they crowd into retail hot spots like the San Marcos outlet malls and the surrounding hotels and restaurants.
Not to mention the fact that the holiday could become even more significant after the Legislature reforms the state’s school finance system. Some type of increase in the sales tax is likely this year in light of the property-tax cut that state leaders want to deliver.
Permalink | | Categories: Taxes
February 16, 2005
Perry: Wait-and-see on gas tax proposal
The Guv says he’s taking a wait-and-see attitude on a House proposal to increase the long-frozen gas tax in Texas.
“Let’s just see how this works itself out,” Gov. Rick Perry said today at a midday press conference.
So what about his reported comments a couple of weeks ago, to a reporter’s question, opposing an increase in the gas tax?
“That was a question of we’re gonna raise X amount of money to put on top of the gasoline tax at this point in time,” he said.
“If that is the parameters then no I don’t support that. But that’s not what (House Speaker Tom Craddick’s) talking about here. He’s talking about a long-range plan as I understand it. And again we don’t know how it’s going to be implemented.”
For his part, Craddick said today he does not view as a tax hike the proposal to allow the 20-cent-a-gallon tax on gasoline to grow from year to year by an amount based on inflation. “We’re not increasing the gas tax,” he said, acknowledging that the inflationary index would make the tax higher.
Permalink | | Categories: Taxes
January 27, 2005
Craddick wants new appraisal cap
House Speaker Tom Craddick says he agrees with Gov. Rick Perry that lawmakers need to lower the cap on increases in property appraisals. But Craddick stopped short of supporting Perry’s call in his State of the State speech Wednesday for the cap to be lowered from 10 percent to 3 percent.
“I don’t know if I’d go to 3, but I think we need to bring the 10 percent appraisal cap down,” Craddick said. “I do not know if we have the votes to do that.”
Lowering the cap would take a constitutional amendment, meaning it needs approval from two-thirds of the House and Senate and a simple majority of the public.
