March 07, 2005
Republican plans panned

Lots written about House Bill 2, the Republican school finance bill, and House Bill 3, the tax overhaul bill, and much of it is decidedly negative.

The Chron writes about how much more regressive the tax system under HB3 would be, then editorializes against it. The Express News can't wait for the Senate to alter HB2, while the DMN calls on the business community to revolt against it. The Star Telegram says "the guiding vision this year is the same tired, old approach that has failed Texas schools in the past", while the Statesman calls HB2 an exercise in partisan politics.

The news isn't much better than the op-ed pages. Even Grover Norquist is taking potshots at HB3.

"Speaker Craddick and the House seem to want to shut down Texas for business," Norquist said in the release. "A payroll tax would raise the cost of everything produced in the state, and eliminate Texas' competitive advantage. And sales taxes would raise the cost of every consumer good, lowering the standard of living of Texas workers."


In a lengthy written reply to Norquist, Craddick said Norquist "needs to get his facts straight," stressing that the bill lowers property taxes by an equal amount.

"As we raise certain state revenues, they are offset by property tax relief to consumers and businesses," Craddick said. "It is dangerous to get the facts wrong and to criticize a plan without looking at both sides of the issue."

Sweet. Like Andrew D, I shudder to realize that I'm on ol' Grover's side on this one, at least as far as the payroll tax being a bad idea is concerned. Why we can't just plug the loopholes in the franchise tax so that LLPs and LLCs have to pay it - you may recall this was a priority of Governor Perry's from the 78th Lege - is a bit of a mystery to me. PerryVsWorld thinks this might represent an opportunity for KBH to attack Governor Perry from the right. There's a fun thought. And of course, since it involved taxes and Rick Perry, Comptroller Strayhorn is right there with the brickbats.

Two things worth pointing out: Kimberly Reeves has a story in the AusChron that casts the battle over HB2 as one of sincere philosophical differences rather than partisan jockeying. It's a very interesting perspective, so give it a read. Also, this Statesman story indicates that the Democrats have succeeded to an extent with their introduction of an alternate plan.

Democratic leaders made the vote even more difficult for Republicans last week by proposing their own plan for school funding that they said includes $2 billion more over two years than the Republican plan does. They called for a cut in property tax rates that was half the size of the Republicans' but also said they wanted to triple the $15,000 exemption on the taxable value of a home. Businesses would see a smaller cut in property taxes.

A large homestead exemption often allows owners of less expensive homes to see a sharper decrease in their tax bills than a straight rate cut. That allows Democrats to say that they could boost school spending by $2 billion while giving the owner of an average home in most parts of the state a larger property tax cut under their plan.

"We hope to offer this as a complete alternative so members can choose which is better for their district," said Rep. Jim Dunnam, D-Waco, chairman of the House Democratic Caucus.

The Democratic plan, likely to be offered as an amendment on the House floor, would open the door for future challengers to say that some GOP incumbents voted against a larger tax break for homeowners. But Cal Jillson, a political science professor at Southern Methodist University, said he expects the House to approve the GOP-backed proposal.

"I expect them to pass a bill that will put it in the court of the Senate, and they will take a more expansive view," Jillson said. "The Senate will pass a bill that will go back to the House, and that's when the pressure will come to adopt the Senate version, which will provide more funding."

The piece notes that at least one Republican, Terry Keel, is on record as being against HB3, and more may follow. Some last minute wrangling has apparently secured the support of rural lawmakers on HB2, so that one is closer to passing. Stay tuned, this will be complicated.

Posted by Charles Kuffner on March 07, 2005 to Budget ballyhoo | TrackBack

We're not there yet. Increasing the homestead exemption (proposed to triple under the Demos' alternative) won't help renters a bit.

The only way to revise the fundamentally regressive tax system in Texas is to go to an income tax. Until the Demos find the gumption to throw down the glove, it's all just whoofin'.

Posted by: Demo Memo on March 8, 2005 1:38 AM