SWC Bonfire
07-07-2005, 08:56 AM
Well, we'll see if they can get this thing out of conference committee and on the books:
79th LEGISLATURE: SPECIAL SESSION
By a vote, House approves tax change for schools
Plan shifts some costs to business, consumers from property owners.
By Mike Ward, Jason Embry
AMERICAN-STATESMAN STAFF
Thursday, July 07, 2005
A plan to broaden Texas business taxes and increase sales taxes to pay for billions of dollars in school property tax cuts was approved in the House on Wednesday by a single vote, moments after appearing to lose by the same margin.
The vote came on the same day the state Supreme Court considered whether the current school finance system — which distributes property tax revenue among districts — complies with the Texas Constitution. The high court heard arguments in a lawsuit that more than 300 school districts filed against the state.
MORE ON THIS STORY
Complete Legislature coverage
Capping more than nine hours of politically supercharged debate at the Capitol, the dramatic 73-72 vote approved a scaled-down version of tax shifts House members had passed earlier this year. House members approved it with hopes of doing in the next couple of weeks what they couldn't during the spring session: Finding common ground with the Senate to overhaul the way the state pays for its schools.
House Speaker Tom Craddick, R-Midland, said he expects that the measure will pass by a few more votes on final reading today.
"We knew it would be close. We knew we were within one or two votes of it," Craddick said. "I've been here a long time, and every tax bill and tax vote has been close and has been controversial."
The plan approved Wednesday would raise the state sales tax from 6.25 cents per dollar to 7.25 percent and expand it to car repairs, bottled water and computer programming, among other things. It would boost cigarette taxes by $1 per pack. And it would require more companies to pay the state's franchise tax, but it doesn't introduce any new taxes on business.
In exchange for the tax increases, the House plan would cut the maximum property tax rate for school maintenance and operations from $1.50 per $100 in assessed property value to $1.23 this year and $1.12 next year.
But a preliminary analysis by the nonpartisan Legislative Budget Board said that the measure would result in a net tax decrease only for households with incomes of $100,000 or higher.
On the initial vote, House Bill 3 failed to pass 74-73 — with Craddick, who normally does not vote as presiding officer, voting in favor.
A hushed silence dropped over the House as Craddick verified each vote.
Two members who voted against the measure could not be located — Reps. Craig Eiland, D-Galveston, and Trey Martinez-Fischer, D-San Antonio — and their votes were then struck from the tally, leaving the one-vote margin of passage.
Thirteen of the 87 House Republicans joined Democrats in voting against the bill.
Democrats immediately seized on the razor-thin passage as a sign that the House-passed plan is in trouble, and needs to be revamped to get it to final passage.
Rep. Mark Strama, D-Austin, said the vote "sends the message that this is divisive plan that has the House split almost evenly and that . . . it would be advisable for the leadership to moderate the plan by reducing the sales tax and balancing the burden of new taxes more evenly across all taxpayers."
With two weeks left in a 30-day special session, major hurdles remain.
Because tax bills must originate in the House, the Senate has not yet weighed in with its own plan, but it is expected to start doing so today.
And the plan that the House approved Wednesday contains some of the same elements that most alarmed senators in the regular session, such as a proposal to give Texas the highest state sales tax rate in the country.
The Senate has shown a preference for making businesses shoulder more of the burden, arguing that they will receive sizable property-tax cuts.
In case the Legislature can't agree to a new school financing scheme this month, House members approved a separate bill Wednesday, HB 1, that restores the public education money lawmakers had approved in the regular session.
Gov. Rick Perry had vetoed that money when he called the Legislature into special session.
Perry won a victory in the House on Wednesday when lawmakers rebuffed a proposal to give businesses the choice of paying a payroll tax or the corporate franchise tax.
Perry has urged lawmakers to modify the franchise tax to make about 10,000 more companies pay it by including corporations that now establish partnerships to avoid paying it.
He had hoped to move the sluggish school-finance negotiations forward by encouraging lawmakers to abandon a payroll tax that many of them did not want to pass and that could have slowed the tax-swap push considerably because it is a tough political sell.
Rep. Warren Chisum, R-Pampa, proposed an amendment that would give businesses the option of choosing between a payroll tax and the franchise tax. He said 325,000 more Texas businesses would pay taxes, raising an additional $100 million and ensuring a fairer tax system.
Perry had met with several dozen House Republicans for breakfast Wednesday, hours before the debate began, to underscore his opposition to the payroll tax. And his top aides were busy throughout the day, before the vote on Chisum's amendment, lobbying against its adoption. House members then killed the amendment 96-47. Democrats and Republicans split both ways on the vote.
During the marathon debate Wednesday, one lawmaker warned that one part of the bill could hit Austin hard: Software development will be taxed for the first time.
Throughout the day, emotions ran high at times as most of the more than 91 proposed amendments were either tabled or withdrawn. The amendments included increased taxes on beer and wine, a three-year moratorium on property tax hikes, legalization of video slot machines, a new tax on airplane repairs to pay for school supplies — even an $8-per-customer tax on nude-dancing clubs.
The school finance debate was not left solely to the legislative arena Wednesday. Next door to the Capitol, lawyers for more than 300 school districts and the state argued over whether the current finance system is constitutional.
The eight Supreme Court justices heard two hours of oral arguments in the state's appeal of a district judge ruling last year that the school funding system is unconstitutional. The justices are not expected to rule for at least a couple of months.
Attorney General Greg Abbott and his lawyers argued that the Constitution does not allow judges to weigh in on the adequacy and fairness of the school finance system, two of the key issues in the school lawsuit.
"The school districts are asking the courts of the state of Texas to order the Legislature to raise taxes and spend more money on education," said state Solicitor General Ted Cruz, who argued before the high court on Abbott's behalf.
Lawyers for the school districts suing the state say the Supreme Court has repeatedly asserted its role in education matters.
"We're not trying to get the court to order the state to embark on any specific remedy," said David Thompson, a Houston lawyer representing a group of school districts that includes Austin and Round Rock. "What we have asked for is for the court to stop the operation of an unconstitutional system if the violations are not corrected."
79th LEGISLATURE: SPECIAL SESSION
By a vote, House approves tax change for schools
Plan shifts some costs to business, consumers from property owners.
By Mike Ward, Jason Embry
AMERICAN-STATESMAN STAFF
Thursday, July 07, 2005
A plan to broaden Texas business taxes and increase sales taxes to pay for billions of dollars in school property tax cuts was approved in the House on Wednesday by a single vote, moments after appearing to lose by the same margin.
The vote came on the same day the state Supreme Court considered whether the current school finance system — which distributes property tax revenue among districts — complies with the Texas Constitution. The high court heard arguments in a lawsuit that more than 300 school districts filed against the state.
Complete Legislature coverage
Capping more than nine hours of politically supercharged debate at the Capitol, the dramatic 73-72 vote approved a scaled-down version of tax shifts House members had passed earlier this year. House members approved it with hopes of doing in the next couple of weeks what they couldn't during the spring session: Finding common ground with the Senate to overhaul the way the state pays for its schools.
House Speaker Tom Craddick, R-Midland, said he expects that the measure will pass by a few more votes on final reading today.
"We knew it would be close. We knew we were within one or two votes of it," Craddick said. "I've been here a long time, and every tax bill and tax vote has been close and has been controversial."
The plan approved Wednesday would raise the state sales tax from 6.25 cents per dollar to 7.25 percent and expand it to car repairs, bottled water and computer programming, among other things. It would boost cigarette taxes by $1 per pack. And it would require more companies to pay the state's franchise tax, but it doesn't introduce any new taxes on business.
In exchange for the tax increases, the House plan would cut the maximum property tax rate for school maintenance and operations from $1.50 per $100 in assessed property value to $1.23 this year and $1.12 next year.
But a preliminary analysis by the nonpartisan Legislative Budget Board said that the measure would result in a net tax decrease only for households with incomes of $100,000 or higher.
On the initial vote, House Bill 3 failed to pass 74-73 — with Craddick, who normally does not vote as presiding officer, voting in favor.
A hushed silence dropped over the House as Craddick verified each vote.
Two members who voted against the measure could not be located — Reps. Craig Eiland, D-Galveston, and Trey Martinez-Fischer, D-San Antonio — and their votes were then struck from the tally, leaving the one-vote margin of passage.
Thirteen of the 87 House Republicans joined Democrats in voting against the bill.
Democrats immediately seized on the razor-thin passage as a sign that the House-passed plan is in trouble, and needs to be revamped to get it to final passage.
Rep. Mark Strama, D-Austin, said the vote "sends the message that this is divisive plan that has the House split almost evenly and that . . . it would be advisable for the leadership to moderate the plan by reducing the sales tax and balancing the burden of new taxes more evenly across all taxpayers."
With two weeks left in a 30-day special session, major hurdles remain.
Because tax bills must originate in the House, the Senate has not yet weighed in with its own plan, but it is expected to start doing so today.
And the plan that the House approved Wednesday contains some of the same elements that most alarmed senators in the regular session, such as a proposal to give Texas the highest state sales tax rate in the country.
The Senate has shown a preference for making businesses shoulder more of the burden, arguing that they will receive sizable property-tax cuts.
In case the Legislature can't agree to a new school financing scheme this month, House members approved a separate bill Wednesday, HB 1, that restores the public education money lawmakers had approved in the regular session.
Gov. Rick Perry had vetoed that money when he called the Legislature into special session.
Perry won a victory in the House on Wednesday when lawmakers rebuffed a proposal to give businesses the choice of paying a payroll tax or the corporate franchise tax.
Perry has urged lawmakers to modify the franchise tax to make about 10,000 more companies pay it by including corporations that now establish partnerships to avoid paying it.
He had hoped to move the sluggish school-finance negotiations forward by encouraging lawmakers to abandon a payroll tax that many of them did not want to pass and that could have slowed the tax-swap push considerably because it is a tough political sell.
Rep. Warren Chisum, R-Pampa, proposed an amendment that would give businesses the option of choosing between a payroll tax and the franchise tax. He said 325,000 more Texas businesses would pay taxes, raising an additional $100 million and ensuring a fairer tax system.
Perry had met with several dozen House Republicans for breakfast Wednesday, hours before the debate began, to underscore his opposition to the payroll tax. And his top aides were busy throughout the day, before the vote on Chisum's amendment, lobbying against its adoption. House members then killed the amendment 96-47. Democrats and Republicans split both ways on the vote.
During the marathon debate Wednesday, one lawmaker warned that one part of the bill could hit Austin hard: Software development will be taxed for the first time.
Throughout the day, emotions ran high at times as most of the more than 91 proposed amendments were either tabled or withdrawn. The amendments included increased taxes on beer and wine, a three-year moratorium on property tax hikes, legalization of video slot machines, a new tax on airplane repairs to pay for school supplies — even an $8-per-customer tax on nude-dancing clubs.
The school finance debate was not left solely to the legislative arena Wednesday. Next door to the Capitol, lawyers for more than 300 school districts and the state argued over whether the current finance system is constitutional.
The eight Supreme Court justices heard two hours of oral arguments in the state's appeal of a district judge ruling last year that the school funding system is unconstitutional. The justices are not expected to rule for at least a couple of months.
Attorney General Greg Abbott and his lawyers argued that the Constitution does not allow judges to weigh in on the adequacy and fairness of the school finance system, two of the key issues in the school lawsuit.
"The school districts are asking the courts of the state of Texas to order the Legislature to raise taxes and spend more money on education," said state Solicitor General Ted Cruz, who argued before the high court on Abbott's behalf.
Lawyers for the school districts suing the state say the Supreme Court has repeatedly asserted its role in education matters.
"We're not trying to get the court to order the state to embark on any specific remedy," said David Thompson, a Houston lawyer representing a group of school districts that includes Austin and Round Rock. "What we have asked for is for the court to stop the operation of an unconstitutional system if the violations are not corrected."