The Texas Tax Bill

The Texas House of Representatives will on Monday vote on Governor Rick Perry's tax bill. Are you ready for the debate? Should we exempt anyone? Where do you stand?

Before you answer those questions let me go over the events of the last few days. First, you should know that the "tax bill" is not one bill, but actually a number of bills that were kept apart so that members could individually vote on different aspects of the plan.

Broadly speaking here are the bills and what they do: House Bill 1 would use $2.4 billion of the $8 billion state budget surplus for a 12 percent property tax cut. House Bill 2 would dedicate all revenue from a new business tax and higher tobacco taxes to further property tax cuts. House Bill 3 would enact a new broad-based business tax. House Bill 4 tightens and clarifies motor vehicle sales rules, where some dollars were slipping through the cracks because consistent language was missing from sales documentation. House Bill 5 might mean an extra $623 million to school funding accounts, as it sets aside an increase to $1 on tobacco taxes.

Limits On Debate
These bills will be debated Monday and can be watched starting at 10:00 a.m. Unlike most debates on bills, Republicans on Friday passed rules that would limit amendments that would seek to spend the money raised by the tax-swap plan on anything other than property tax cuts. That would stop Democrats who would want to spend as much on school improvements as property tax relief.

One such plan would be that filed Thursday by Rep. Scott Hochberg, D-Houston, which included teacher pay raises, employee health insurance, facilities funding to reduce classroom size, more money for transportation, textbook dollars and programs for special-needs students. Hochberg's plan is similar to the one he filed last summer, that passed with bi-partisan support despite the wishes of GOP leaders, who cut off debate and killed the legislation after Mr. Hochberg's amendment passed. Chances are almost slim to none that Hochberg's bill will be approved in committee, meaning he will have to file it as an amendment to another bill as he did last year. And so the logic behind the efforts of House GOP leaders to head off such amendments by backing a prohibition on any amendments that seek to spend the money raised by the tax bill on anything other than property tax cuts.

Vince at Capitol Annex has the rule changes.

HB 1 - The Get Outta Dodge Plan
House Bill 1 authored by Rep. Warren Chisum, R-Pampa was quickly labeled the "Get Outta Dodge Plan" because backers see spending the surplus as the quickest way to meet the needs of a Texas Supreme Court June 1 deadline to change the school tax system.

Unfortunately that's not all that HB1 does. Besides spending the surplus to lower local school taxes, the bill also tampers with the Robin Hood share-the-wealth plan, which answered an earlier court demand for equity among school districts. Under that system school districts with the most property wealth are required to share some revenue with poorer districts. HB 1 would change how much they must share.

The problem with the legislation is a provision that eliminates recapture on new money the school districts generate. Under current law, commonly referred to as "Robin Hood," some local money from property-wealthy school districts is redistributed to property-poor school districts. HB 1 would allow wealthy school districts to keep all the new money they can generate at the higher tax rates. Recapture is done in order to meet the requirements of the Texas Constitution. These provisions of HB 1 not only causes a loss of support for the overall tax package because it widens the gulf between rich and poor but it jeopardizes the constitutionality of the plan.

The Houston Chronicle has the same point of view.

Because some of us have pulled back support from aspects of the plan, modifications to this bill, I am told, will be made. Let's see.

(Will be back soon to discuss House Bill 2 and House Bill 3)