May 25, 2006
Perry signs HB2

Didn't get to this one yesterday, but Governor Perry signed HB2, the most starkly partisan of the five tax bills from the special session, into law.

Gov. Rick Perry signed a law Tuesday assuring that revenue from new, higher state taxes will help pay for school property tax reductions and, he said, promote "greater tax fairness."

But Democratic challenger Chris Bell said the measure was misdirected and should be repealed.

House Bill 2 is the second of five tax and education-related bills approved during the recent special session to get Perry's signature. It would spend all the revenue from a new, expanded business tax, a $1 per pack increase in the cigarette tax and tightened sales tax collections on used cars to help recoup the revenue lost from cutting school operating taxes in most districts by about one-third over the next two years.

After that, two-thirds of the revenue generated by those taxes will pay for further property tax cuts and one-third will be spent on the public schools.


Bell said he generally supports the new business tax. But repeating concerns expressed by Democratic legislators and some educators, he said some of the additional money should be spent to boost school funding, not just to lower property taxes.

"I think that (House Bill 2) is one of the measures that's going to need to be undone, if we're going to be able to realize any new revenue to face the problems that we have here in Texas," he said.

I don't think there's any question that HB2 as is will cause problems in the near future. As I said in my post on what the West Orange-Cove plaintiffs will do next, I see only three possible outcomes: Less property tax relief, more taxes somewhere else, or further cuts in spending beyond even the draconian, to-the-bone cuts from 2003. If I were a betting man, I'd put my chips on an increase and/or expansion of the sales tax, because there's already support for it in the Republican caucus. Watch those straws in the wind carefully next January, because we ought to know fairly early on what changes will be proposed.

Posted by Charles Kuffner on May 25, 2006 to Budget ballyhoo | TrackBack