I wish I could say I’m surprised by this, but I’m not.
Texas’ new business tax may bring in $500 million to $900 million less per year than originally projected, the state comptroller said in a draft letter to lawmakers that was obtained Tuesday by the Houston Chronicle.
When the business tax expansion was approved last year as part of a school finance package, it was expected to bring in about $3.4 billion extra per year to help subsidize local school property tax relief.
If you recall, the $14 billion in lost property tax revenue for the 2007-2008 biennium was to be made up by $6.8 billion in business tax revenue, $1.2 billion in tobacco and other tax revenue, and $6 billion of general revenue. What this means is that if this projection is accurate, that’s another $1 to $1.8 billion per biennium of general revenue that would be needed. Assuming that it could be taken from the $4 billion or so that Chisum and Company want to squirrel away for the next go-round, it wouldn’t have any immediate effect, but as with all things involving this irresponsible tax cut, the bill will come due soon and when it does it’s gonna suck.
“There could be some room for concern,” said Rep. Warren Chisum, R-Pampa, House Appropriations Committee chairman, who added that Comptroller Susan Combs may increase her overall revenue estimate.
“We know that we’re going to get some additional tax revenue, so we’re going to have enough money probably to cover it,” Chisum said. “The overall revenue estimate is not lowered and … very well could be raised by that much.”
Ways and Means Committee Chairman Jim Keffer, R-Eastland, said he expects lawmakers will “have more than enough to cover what we need to do. We just need to go through this bump in the road here to get us where we want to go.”
“But he’s got high hopes, he’s got high hopes/He’s got high apple pie, in the sky hopes”
Sorry. Couldn’t help myself. There’s no plans here, but hopes a-plenty. Given that the plan for the property tax cut going forward was to hope like heck that the business tax did better than expected, in some sense this is no change from the status quo.
Combs’ letter states, “As guarded as these less-than-definitive results may appear, they must be balanced against the overall fiscal condition of the Texas economy, which is still generating revenues above expectations so far this fiscal year.”
She said her estimate of revenue available for general-purpose spending remains unchanged at $82.5 billion, providing $14.3 billion in new revenue over and above revenues earmarked for specific purposes, including local tax relief.
The new business tax law required 3,404 entities to submit a report this year providing information on their expected tax liability under the new tax, which starts next year. Reports were submitted covering only about 2,500 of them and, Keffer said, “a lot of those that were filled out were filled out wrong.”
Combs has said previously there are no consequences in the law for “having guessed everything totally wrong.”
And with such precision methods as these, it’s almost hard to criticize Chisum and Keffer for waving their hands at Combs’ estimates. Maybe we should just take a cue from Tinkerbell and clap louder. At this point, it couldn’t hurt.