Texas House leaders said Monday they can cut taxes by more than the $4 billion initially proposed by their Senate counterparts, upping the ante for the high-profile issue despite other looming big-ticket state needs.
“We really believe that we ought to be able to do more than $4 billion in tax cuts here in the House,” Ways and Means Committee Chairman Dennis Bonnen, R-Angleton, said. “We don’t have a number at this point. We just know that we can do better than that.”
Asked about exceeding $4 billion in tax cuts for homeowners and businesses combined, House Speaker Joe Straus, R-San Antonio, said, “We’re on the same page.”
It is the closest House leaders have come to identifying a specific tax cut figure they are contemplating.
Straus, Gov. Greg Abbott and Lt. Gov. Dan Patrick previously had declared tax relief a priority for this legislative session, with Abbott saying he will not sign a budget that does not include tax cuts for business.
Some were surprised by the House leaders’ pronouncement.
“Any kind of tax relief needs to be sustainable,” said Rep. Lyle Larson, R-San Antonio. “I don’t think anybody wants to pass a tax cut and then retreat in the subsequent (legislative) session.”
Rep. Jessica Farrar, D-Houston, said a higher priority should be placed on public education, still struggling after massive cuts in 2011 that have been only partly restored.
“I think we have got to look at our priorities and make sure that we can take care of tomorrow’s workforce,” she said.
Flanked by a dozen Republican senators, Lt. Gov. Dan Patrick on Tuesday announced a slate of legislation he said would provide lasting tax relief to businesses and homeowners in Texas.
“At the end of the day, the Texas economy stays strong if people have more money in their pocket, if businesses have more money to create jobs,” said Patrick, a Republican.
Patrick said three recently filed bills — Senate Bills 1, 7 and 8 — would deliver a combined $4.6 billion break from the state’s property and business taxes.
About $2.5 billion of that total would go toward increasing homestead exemptions from school property taxes. Currently set at $15,000, they would instead be 25 percent of the median home market value in the state. In 2016, when the median home market value is projected to be $134,500, that could mean as much as a $33,625 exemption.
Another $1.5 billion would stem from reducing the state’s franchise tax on businesses by 15 percent.
But there are signs that it may encounter opposition from within Patrick’s own party.
“We have got to deal with the major problems of this state before we commit to tax cuts,” state Sen. Kevin Eltife, R-Tyler, said in an interview after the announcement. “We have some big ticket items that we can actually resolve this session. I think those needs come first.”
Eltife said he wanted to see a long-range plan to fix the significant shortfalls in state-funded pensions and deferred maintenance on state facilities.
“I think it’s the cart before the horse. We need to go through the budget process and make sure we have those needs addressed in our budget before we commit to cutting $4 billion a year in revenue out of the state budget,” he said. “It might work down the road, but I want to see a plan of action for the needs of this state before I commit to cutting taxes.”
Silly Sen. Eltife, and Reps. Larson and Farrar. Tax cuts are the only real need we have. Weren’t you paying attention to the 2014 campaign?
Besides, we all know nothing like this could ever happen here.
Republican governors meeting in Washington last weekend said financial conditions in their states have deteriorated so much that they must raise taxes, even if it means crossing their own party.
In the face of a historical antipathy deepened by the tea party movement, chief executives in Alabama, Nevada and Michigan among other states are proposing increases this year to address shortfalls or to spend more on faltering schools and infrastructure. They advocate higher levies on businesses, tobacco, alcohol and gasoline, in some cases casting the increases as user fees.
The governors are at a crossroads. They are choosing between the path of Gov. Sam Brownback in Kansas, who has refused to change course even after tax cuts provoked furious opposition, and that of Alabama’s Robert Bentley, who has said the state’s perennially precarious budget has reached the breaking point.
“I don’t want to raise taxes, but I also know that we need to pay our debts,” Bentley said. “We don’t have any choice.”