Losing focus

As noted yesterday by the Yellow Dog Blog, this special session has essentially ceased to be about school finance reform and is instead focusing first on property taxes, with maybe some school stuff thrown in if they can. In particular, that means if the gambling expansion goes through. No gambling, no extra school money. That's the kind of leadership we have.

Here are the "highlights", such as they are. I note that there's now a school finance blog, which has some of the actual legislative info, so check it out (via BOR).

House Panel to vote Saturday

Rep. Kent Grusendorf, R-Arlington, said he hopes to have a version for action by the House Select Committee on Public School Finance on Saturday that the 150-member House can debate next week.

"I don't think we want the school community up in arms," committee Chairman Grusendorf said during a 15-minute meeting billed earlier as the panel's chance to approve the plan.

A factor in the delay could be a South Texas legislator's concern over a computer analysis suggesting Rio Grande Valley districts will get less aid under the plan than they would if lawmakers kept the "Robin Hood" system, which this year required property-rich districts to share $1.2 billion with others.

Rep. Rene Oliveira, D-Brownsville, awaiting an explanation from GOP leaders, said: "If there is a defect in this model, it's better for us to find out now and address it. This is probably the most important legislation most of my colleagues will ever vote on. We need to slow this thing down and make sure we're doing the right things."

Panel expects to pass plan

The legislation and a companion constitutional amendment that would legalize video gambling machines are expected to be voted on Saturday by the House Select Committee on Public Education.

The measures could then be considered by the full House next week at the halfway point of the 30-day special session.

Committee Chairman Kent Grusendorf, R-Arlington, said he expects the 29-member panel to approve the two measures Saturday.

"I think we have consensus," he said, referring to latest version of the 400-page bill that would overhaul the school funding system and reduce property taxes by about 30 percent.

The Republican lawmaker cautioned that additional funding for schools is probably contingent on the Legislature agreeing to legalize video gambling machines at seven dog and horse tracks and three American Indian reservations in the state.

No gambling, no help for schools

"Right now we don't have a backup plan," said Rep. Talmadge Heflin, R-Houston, House Appropriations Committee chairman. "My guess is if the VLT (video lottery terminals) didn't go, then there'd probably be some reduction in spending money."

Rep. Kent Grusendorf, chairman of the House Select Committee on Public School Finance, said he thinks most lawmakers' top priority is reducing property taxes. Supporters of increased school spending expressed dismay that funding education has become linked to gambling. Dick Lavine, a fiscal analyst for the Center for Public Policy Priorities, which advocates for fairness in taxation and education funding, said lawmakers have their priorities "upside down."

Opposition to gambling mounting

"I think the leadership recognizes there is a growing group of people who are opposed to this," said state Rep. Linda Harper-Brown, R-Irving, who claims to have some 25 signatures of House members firmly opposed, so far.

She would need 51 "no" votes to be absolutely certain of blocking it: A constitutional amendment legalizing slot machines requires 100 votes in the 150-member House, where Republicans hold an 88-62 advantage over Democrats. Two-thirds of the state Senate and a majority of Texas voters would also have to approve it.

With such high stakes, state lawmakers are already making contingency plans in case opponents marshal enough support to stop the slot machines, technically known as video lottery terminals, or VLTs.

Failure to add them as a new source of state revenue will blow an estimated $1.5 billion hole in the latest House school finance package -- about the same amount of new education money the bill envisions for the 2006-07 budget cycle.

The bill is tentatively scheduled for a vote in a House committee this weekend.

"If VLTs go down, that's a huge part of this. Where do you go then?" said Bob Richter, a spokesman for House Speaker Tom Craddick, R-Midland. "I think they are concerned about that and what to do it if goes down."

Bipartisan opposition to gambling

Rep. Rene Oliveira, D-Brownsville, said some of his party members are willing to vote against constitutional amendments that include video lottery terminals and other revenue-raising measures if Republicans don't budge on a sales tax increase.

"The Democrats' position is that the sales tax unfairly shifts the burden to the middle class, poor and fixed-income individuals," Oliveira said.

Much business whining

"We're getting too much of the load," said Wade Sullivan, a Ford dealer in Crockett.

Under the plan, sales taxes on cars would jump, from 6.25 percent to 7.75 percent. For the buyer of a $20,000 car, the sales tax would rise $300, to $1,550.

Car dealers also would have to charge a 6.75 percent sales tax on mechanics' labor, not just on repair parts. And they would have to foot a new payroll tax.

"There's no doubt they want to punish people who drive," said Tom Blanton, vice president for legislative affairs at the Texas Automobile Dealers Association.

Many businesses were furious that the House on Wednesday did an about-face and scrapped a day-old proposal to expand the sales tax to services by lawyers, accountants, Realtors, architects, engineers, interior designers, barbers and beauticians.

"Obviously, haircuts are more important to these people than the ability to get around," said Mr. Blanton, who represents 1,400 car dealers. He said the payroll tax is "the job-killer tax, probably the most insidious of all."

No new booze taxes - yet

"In the beginning, everything was on the table," said Robert Black, a spokesman for Mr. Perry. "But after weeding things out, that simply didn't make it into the plan."

The liquor lobby has long been among the most powerful and influential in Austin. According to the Institute on Money in State Politics, about $1.5 million was given to Texas candidates in 2002 by beer, wine and liquor interests.

Despite the fierce efforts of lobbyists, some lawmakers are angling to tack a beer and liquor measure as a school-finance plan reaches the House floor. On Thursday, Rep. Charlie Howard, R-Sugar Land, filed a bill that seeks an additional 1 percent sales tax on ale, beer, wine and malt liquor, among other drinks.

Legislators and lobbyists have disappeared into the back halls of the Capitol to hammer out a deal, with some looking to replace funding options they don't like by tossing others into the pot.

Some House members, like Richardson Republican Fred Hill, want the liquor industry to share more of the burden.

"I would think it's [tax increase on beer] gaining momentum," said Mr. Hill, who is expected to introduce an amendment raising the taxes on alcohol.

Officials from the Texas beer industry say they already pay high taxes and fees.

Mike McKinney, a lobbyist for the Wholesale Beer Distributors of Texas, said the Texas beer industry bears the eighth-highest tax burden per capita in the nation – $26.90 annually, including state and federal excise taxes on barrels of beer and sales taxes.

"We are taxed a good deal higher than the national average," Mr. McKinney told the House committee studying school finance. "We're also quite a bit higher than our neighbors."

The Texas per capita rate is double that in Louisiana and $7 more than the industry is taxed in Oklahoma, according to industry figures.

"We're always concerned about letting the neighboring states capture part of our market because we get beyond them," said Dennis Bonnen, R-Angleton. "I see two states immediately where we're [taxed] better than twice what they are."

Mr. Hill, though, said the overall per capita tax numbers could be misleading because they don't factor the massive quantities of beer consumed in the Lone Star state.

Mr. McKinney conceded that point: "We do drink a lot more beer in Texas than they do in Arkansas."

If they limited this one to only taxing wimpy downstream brands like Bud and Miller, I'd support it. It'd practically be a public service.

Posted by Charles Kuffner on April 30, 2004 to Budget ballyhoo | TrackBack