May 02, 2004
Off to the sausage grinder

As expected, the latest version of The Plan passed out of committee yesterday, though apparently no one expects it to survive in its current form. Some taxes, such as the imposition of sales tax on auto repair and the $1 surcharge on movie tickets, are now gone, while others like a new tax on alcohol and billboard advertising have been tacked on. This has turned into a game of financial Whack-a-Mole, with each singled-out constituency's lobby raising hell until the Lege untaxes them in favor of someone else and thus forces that group to rally its troops. Not that I think a reasonable and shallow tax on as broad a base as possible is a more sensible solution than figuring out whether my lobbyist can beat up your lobbyist or not.

Here's a crazy idea: Why not try to figure out how much these proposals might save or cost an individual? With the proviso that nothing is yet set in stone, the Express News took a whack at it.


Legislators added bottled water and mixed drinks to items that would be taxed under a plan designed to reduce local school property taxes, a plan that could save San Antonio homeowners more than $400 its first year depending on where they live and the value of their houses.

But the property tax savings would shrink for individuals who sip cocktails, buy newspapers and magazines or go to ticketed sports events.

And big spenders could pay as much as $1,100 more in state taxes if they smoke a pack of cigarettes a day and purchase both a new car and boat the same year.

The San Antonio Express-News gauged the effect of several proposed tax changes on homeowners in districts served by Reps. Elizabeth Ames Jones and Mike Villarreal, two San Antonio members of a House panel that's poised to approve the plan.

The results signal the plan's possible pocketbook impact, though they do not include ripples from a proposed payroll tax of 1.25 percent of each employee's gross annual pay or $500, whichever is less, or the legalization of slot machines at horse and dog tracks and three Indian reservations and new taxes on cigars, newspaper inserts, smokeless tobacco and billboard advertising.

[...]

In Villarreal's inner-city district, the owner of a home valued at $58,000 for tax purposes the average for the district less the standard homestead exemption would save $259 if school districts were required to lower their tax rates to $1.05 per $100 valuation, as the plan states.

That rate, currently limited to $1.50 per $100, is for maintenance and operations. School districts also can set a separate tax rate to pay long-term debt.

A proposed half-penny increase in the general state sales tax pushing what San Antonio residents pay on many purchases from nearly 8 cents on the dollar to nearly 8.5 cents would cost an estimated $62 a year.

In Jones' Northwest Side district, the owner of a house valued at $123,000, the average for the district less the exemption, would see property taxes drop $555, while general sales tax costs would increase by an estimated $132.

Another wrinkle: homeowners who itemize deductions on their federal income tax would owe more with the swap of property taxes for sales taxes, because sales taxes are deductible, but property taxes are not.

If they deduct, Austin economist Stuart Greenfield said the typical resident in Jones' district would owe $62 more in federal taxes while an average resident of Villarreal's district, in a lower tax bracket, would owe $24 more.

"The message is Texans are going to be paying more taxes to the state, less to the local school district and more to Uncle Sam," Greenfield said.

In both districts, residents would face additional taxes if they took a friend to a sports event, linked a home computer to the Internet or sipped margaritas.

Buying a new $20,000 car would add $300 to a resident's tax bill. Want that $7,000 boat? Add $542 in taxes. A pack-a-day smoker would need to spend an extra $300 a year.


As a non-smoking and non-boating homeowner who doesn't foresee the need to buy a new car next year, I'll do pretty well under this proposal. Still doesn't mean it's a good idea - I'd do pretty well if we abolished property taxes, too, and I don't think there's much support for that.

And there continues to be talk about a state income tax, not by anyone in Austin, of course, but by an increasing number of interested parties. The day when a serious bill gets introduced and actually debated may be closer than you think.

Finally, in the Remembering One's Roots department, Governor Perry's old school has hit hard times.


Gov. Rick Perry often praises the education he received from Paint Creek, a kindergarten-though-12th-grade school that sits along a winding, desolate West Texas road.

But the school has hit hard times, causing it to join more than 200 school districts, both wealthy and poor, in suing the state over its share-the-wealth school finance system.

The district's annual budget this school year is $1.13 million, down from $1.24 million last year. Coping with the financial shortfall has meant hard choices for Paint Creek, where all the district's 96 students -- down from 146 in 2002 -- attend class in the same two-story building and the motto is "No dream too tall for a school so small."

Last fall, the school let three of its 19 teachers go and asked two others to double up classes and teach two grades. With fewer students and declining property values, the Paint Creek school district faces a crisis.

As legislators meet in Austin to wrestle with school finance, Paint Creek educators and parents hope Perry won't forget the small ranching and farming district of about 600 people where he grew up.

"Because the school district is the community, once the school district is gone, it's time and again been proven, the community dries up," Paint Creek teacher Keith Medford said.

[...]

Emily Medford, the mother of two Paint Creek students, doesn't like Perry's plan because she said it could hurt rural districts with small tax bases. More worrisome, however, is that Perry seems to have forgotten his roots, she said.

"We don't feel he's looking out for the rural population as much as he is big cities' interests," said Emily Medford, a distant cousin of the Paint Creek teacher. "Any changes are scary because of the unknown. It's very, very important to us that Paint Creek stays open."

Keeping small, rural schools open isn't just a Paint Creek problem. Similar districts are struggling also, Paint Creek Superintendent Don Ballard said.

"We ought to be concentrating more on `what programs can we provide for students?' instead of concentrating on `what do we have to cut to survive?' " Ballard said.

In 2002, Texas had 419 rural districts and 122 urban districts, Texas Education Agency spokeswoman Debbie Graves Ratcliffe said. The urban number takes in nine major cities, their suburbs and districts in smaller cities.

Rural districts face extinction because of a dwindling population, which influences property taxes and enrollment. Complicating matters, the size of the state makes mergers between school districts a challenge because it may mean students have to travel long distances to attend school.

The Paint Creek community is a collection of modest homes. The population is aging, and fewer children are being born in the district's 235 square miles. There are only a handful of businesses.

A couple of years ago, a power plant on Lake Stamford closed and families moved away to seek other jobs. That led to a $10 million drop in the district's property tax rolls and state funding for the school district.


Good luck getting the help you need. I wouldn't be holding my breath for it, though.

Posted by Charles Kuffner on May 02, 2004 to Budget ballyhoo | TrackBack
Comments

Gee, a movie ticket tax -- there's a real vote-getter.

I'm interested to see that the rural-urban split is still strong in the Lege, even after party power passed from the reds to the blues. Some things just don't change.

Posted by: B. K. Oxley (binkley) on May 2, 2004 9:17 PM

I'd be curious to know what level of state income tax would need to be imposed in order to abolish the sales tax completely.

I wonder because I have a suspicion that some anti-tax folks might limit their resistance to an income tax if they saw it merely *replaced* an existing tax. If they see it added -- and the sales tax still in place -- even if it were revenue neutral, it would *feel* like a new tax.

Plus, the income tax is federally deductible, and unlike the sales tax, is not regressive (even if it's a flat-rate tax).

Posted by: Tim on May 3, 2004 8:18 AM

I was wandering how to get my sister's house submitted to be remodeled. Well for starters her son was the reason i was looking this up on the internet. He is the oldest of 6 kids at home, he is 11. Right now they are living in a two bedroom trailor that is basically falling in around them. The other kids age's are ten, eight, six,three,and two.

Posted by: Karlene on October 29, 2004 10:08 PM