The State Senate approved their versions of HBs 2, 3, and 4 yesterday, with HB3 passing through as is. Here's a news roundup of the action:
The Senate made no changes to the business tax bill passed last week by the House. Final passage of House Bill 3, expected today, would send the bill to Perry, a step toward ending a longstanding feud marked by four failed efforts to overhaul the state's tax system in the past two years.
"I think the Senate and House are aligned to go ahead and have a successful session," said Lt. Gov. David Dewhurst.
The Senate also tentatively approved two other bills that are a part of Perry's tax plan. House Bill 4 would collect more sales tax from used vehicle sales by requiring cars and trucks to be taxed at 80 percent of blue book value. House Bill 2 dedicates most of the new revenue from the tax bills to lowering property taxes.
The Senate sponsor, Finance Committee Chairman Steve Ogden, shepherded the business tax bill through the Senate without any changes. That prevents the bill from having to go back to the House and lessens the chances that opponents could kill it, Ogden said.
"If we pass this bill, members, it will be historic. It will permit us to cut property taxes by the greatest amount in our history," said Ogden, R-Bryan.
The vote was 18-13, with two Democrats joining 16 Republicans in supporting the bill. Two Harris County Republicans, Sens. Mike Jackson and Kyle Janek, cast needed votes to bring the business tax up for floor debate, but voted against it in the end.
"I didn't want to be an impediment to a tax cut bill coming to the floor of the Senate," said Janek. But he said he'd rather see the cut paid for with higher sales taxes instead of a new business tax.
Perry on Monday endorsed the $2,000 teacher pay raise agreed to by Dewhurst and House Speaker Tom Craddick. A bill containing the raise is expected to be considered by the Senate Finance Committee today.
The Senate voted 21-10 for HB 2, which dedicates revenue from the business tax and other new taxes to property tax relief. The bill was different from the version passed last week by the House, which dedicates all the tax revenue to lowering property taxes.
Upon final passage, expected today, the bill will go back to the House, which can agree with the changes or ask that a conference committee be appointed.
Under the Senate version all new tax revenue would go to lowering the basic school tax rate from $1.50 per $100 valuation to $1.
After that, two-thirds would go to continued lowering of property taxes and one-third to new public school spending.
When the school tax rate drops to 75 cents, any revenue beyond what it takes to make up for lost property taxes would be dedicated to education.
Craddick said some House members were concerned about the Senate changes in how revenue was dedicated. "They want it all to go to property tax relief because that's what they said they were going to do, and the other way makes it a tax increase. You don't have a total swap," he said.
There's another bone of contention, which Capitol Inside notes:
One issue with the potential to knock the special session off track is the question of whether to make local enrichment subject to the recapture provision that shifts funds from rich districts to counterparts with less taxable values on which to base property tax rates. The amount of local enrichment funds that school districts would be able to generate above and beyond the state-imposed cap on maintenace and operations taxes is also a potential deal-killer in the fourth special session on school finance in the past two years. How legislators will structure a proposed pay raise for teachers and other public school employees is also a question that could undermine the push for Perry's tax package. The question of whether any new money should be spent on public schools in a special session devoted initially to property tax relief and finding a way to meet a Supreme Court order also has the potential to sink the remaining parts of a five-piece package that cleared the House last week.
Elsewhere, there's optimism expressed in the DMN.
The plan is taking some light shelling in the Senate, but most don't think any of the shots will be fatal. One of the parts that's always been toughest, the business tax, tentatively passed the Senate unchanged Monday and could be on its way to the governor as soon as today.
"With a few changes, I think all these bills will probably pass," said Senate Education Committee chairwoman Florence Shapiro, R-Plano.
The main difference between this session and other engagements has been that the Texas Supreme Court ordered the Legislature to come up with a new way to finance schools by June 1. The current system has most property taxes bumping up against a legislatively set cap, and the state constitution forbids a statewide property tax.
"The Supreme Court has given us a deadline," Ms. Shapiro said.
Another major factor is that the state has an $8 billion surplus. "The little room you have in there might just get you over the hump," she said.
While this special session has moved quickly compared with previous efforts at school funding reform, Dewhurst noted, "I thought we were close last year several times. I'm a little bit reluctant to declare an immediate victory. I don't know when we'll be able to get all of this legislation passed, but I'm very optimistic."